Income Tax

12 Months Ended

Dec. 31, 2024

Income Tax

Income Tax

Note 19. Income Tax

Amplify Energy is a corporation and, as a result, is subject to U.S. federal, state, and local income taxes.

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

	For the Year Ended
	December 31,
	2024		2023
	(In thousands)
Current taxes:
Federal	$	43	$	(4,286)
State		(275)		(531)
Total current income tax benefit (expense)		(232)		(4,817)
Deferred taxes:
Federal		(2,433)		232,351
State		237		21,445
Total deferred income tax benefit (expense)		(2,196)		253,796
Total income tax benefit (expense)	$	(2,428)	$	248,979

The actual income tax benefit (expense) differs from the expected amount computed by applying the federal statutory corporate tax rate of 21% in 2024 and in 2023 as follows:

	For the Year Ended
	December 31,
	2024		2023
	(In thousands)
Expected tax benefit (expense) at federal statutory rate	$	(3,228)	$	(30,192)
Changes in valuation allowances		—		284,927
Non-cash compensation		189		696
Limit on executive compensation		(492)		(502)
State income tax benefit (expense), net of federal benefit		(578)		(2,430)
State rate change, net of federal benefit		293		(2,541)
State prior year adjustment		255		(380)
Marginal wells credits		1,137		—
Other		(4)		(599)
Total income tax benefit (expense)	$	(2,428)	$	248,979

The Company’s deferred income tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2024		2023
Deferred income tax assets:
Property, plant & equipment	$	58,226	$	69,895
Net operating loss carryforward		180,902		179,627
Disallowed interest expense		7,494		5,580
Accrued liabilities		2,597		2,180
Other		4,993		4,093
Total deferred income tax assets:		254,212		261,375
Valuation allowance		—		—
Net deferred income tax assets		254,212		261,375
Deferred income tax liabilities:
Derivatives	$	1,603	$	6,319
Other		1,009		1,260
Total deferred income tax liabilities		2,612		7,579
Net deferred income taxes	$	251,600	$	253,796

Net Operating Loss Carryforward. In connection with the merger with Midstates in 2019, the Company was subject to IRC §382 loss limitations on pre-merger net operating loss (“NOL”) and tax attributes. As of December 31, 2024, the Company’s federal NOL carryforward of $794.2 million is subject to §382 loss limitations, of which $20.9 million will expire in 2037 and $773.3 million have no expiration. All post-merger NOLs are not subject to §382 loss limitations and do not expire.

As of December 31, 2024, the Company had approximately $422.9 million of state net operating loss carryovers, of which $393.7 million have no expiration period and the remaining will expire in varying amounts beginning in 2037.

Valuation Allowance. In assessing deferred tax assets, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. The assessment considers all available information including, among other things, historical and forecasted taxable income and operating history, the scheduled reversal of deferred tax liabilities and available tax planning strategies. As of December 31, 2024, the Company had three years of cumulative book income. Furthermore, management determined that the Company’s ability to maintain long-term profitability despite near-term changes in commodity prices and capital and operating costs demonstrated that there is sufficient positive evidence to conclude that it is more likely than not that all net deferred tax assets are realizable.

Uncertain Income Tax Position. The Company must recognize the tax effects of any uncertain tax positions that the Company may adopt if the position taken by us is more likely than not sustainable based on its technical merits. For those benefits to be recognized, an income tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company had no unrecognized tax benefits as of December 31, 2024.

Tax Audits and Settlements. The Company’s income tax years 2021 through 2023 remain open and subject to examination by the Internal Revenue Service (IRS). For state and local jurisdictions where the Company conducts operations, the Company’s 2020 through 2023 tax years remain open and subject to examination. In certain jurisdictions where the Company operates through more than one legal entity, each of which may have different open years subject to examination.