Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

8. INCOME TAXES

The Partnership is not a taxable entity for U.S. federal income tax purposes; therefore, the federal statutory rate is zero percent. However, income apportionable to Texas is subject to Texas margin tax.

For the years ended December 31, 2022 and 2020, the variance from the federal statutory rate was primarily due to the Texas margin tax liability. For the year ended December 31, 2021, the variance from the federal statutory rate was primarily impacted by a state margin rate reduction associated with Occidental’s settlement of state audit matters and the Texas margin tax liability.

The components of income tax expense (benefit) are as follows:

	Year Ended December 31,
thousands	2022		2021		2020
Current state income tax expense (benefit)	$	2,188	$	(37)	$	2,702
Deferred state income tax expense (benefit)	1,999		(9,770)		3,296
Total income tax expense (benefit)	$	4,187	$	(9,807)	$	5,998

8. INCOME TAXES

Total income taxes differed from the amounts computed by applying the statutory income tax rate to income (loss) before income taxes. The sources of these differences are as follows:

	Year Ended December 31,
thousands except percentages	2022			2021			2020
Income (loss) before income taxes	$	1,255,643		$	934,192		$	522,850
Statutory tax rate	—		%	—		%	—		%
Tax computed at statutory rate	$	—		$	—		$	—
Adjustments resulting from:
Texas margin tax expense (benefit) (1)	4,187			(9,807)			5,998
Income tax expense (benefit)	$	4,187		$	(9,807)		$	5,998
Effective tax rate	—		%	(1)		%	1		%

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(1)Includes a tax benefit of $12.5 million for the year ended December 31, 2021, related to a reduced Texas margin tax rate resulting from Occidental’s settlement of state audit matters.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets (liabilities) are as follows:

	December 31,
thousands	2022		2021
Depreciable property	$	(14,114)	$	(12,395)
Other intangible assets	(603)		(486)
Other	293		456
Net long-term deferred income tax liabilities	$	(14,424)	$	(12,425)