Income Taxes

3 Months Ended

Mar. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 14 — Income Taxes

We record income taxes using an estimated annual effective tax rate and recognize specific events discretely as they occur. We recorded income tax expense of $110.3 million and $22.9 million during the three months ended March 31, 2023 and 2022, respectively. Our effective tax rate for the three months ended March 31, 2023 is lower than the U.S. corporate statutory rate of 21% primarily due to the release of a portion of our state valuation allowances in addition to income allocated to noncontrolling interests that is not taxable. The effective tax rate for the three months ended March 31, 2022 was lower than the U.S. corporate statutory rate of 21% primarily due to the release of a portion of our federal valuation allowances in addition to income allocated to noncontrolling interests that is not taxable to the Company.

We regularly evaluate the realizable tax benefits of deferred tax assets and record a valuation allowance, if required, based on an estimate of the amount of deferred tax assets that we believe does not meet the more-likely-than-not criteria of being realized. As of March 31, 2023, our valuation allowance was $13.4 million, a decrease of $23.5 million from December 31, 2022. After the change in valuation allowance, we have a net deferred tax liability of $298.3 million.

We are subject to tax in the U.S. and various state jurisdictions. Additionally, we are subject to periodic audits and reviews by U.S. federal and state taxing authorities. As of March 31, 2023, Internal Revenue Service (“IRS”) examinations are currently in process for the 2019 and 2020 taxable years of certain wholly-owned and consolidated subsidiaries that are treated as partnerships for U.S. federal income tax purposes. We are responding to information requests from the IRS with respect to these audits. We are not aware of any potential audit findings that would give rise to adjustments to taxable income and do not anticipate material changes related to these audits.