Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

(6) Income Taxes

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Current income tax expense	$	—	$	(0.4)	$	(0.1)	$	(0.7)
Deferred income tax benefit (expense)	(6.6)		(11.3)		(7.9)		22.7
Income tax benefit (expense)	$	(6.6)	$	(11.7)	$	(8.0)	$	22.0

The following schedule reconciles total income tax benefit (expense) and the amount calculated by applying the statutory U.S. federal tax rate to income (loss) before income taxes (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Expected income tax benefit (expense) based on federal statutory rate	$	3.8	$	(3.7)	$	6.2	$	63.6
State income tax benefit (expense), net of federal benefit	0.6		(1.0)		0.8		7.0
Unit-based compensation (1)	(0.4)		(6.8)		(2.9)		(4.4)
Non-deductible expense related to goodwill impairment	—		—		—		(43.4)
Change in valuation allowance	(1.0)		—		(2.2)		—
Oklahoma statutory rate change (2)	(7.6)		—		(7.6)		—
Other	(2.0)		(0.2)		(2.3)		(0.8)
Income tax benefit (expense)	$	(6.6)	$	(11.7)	$	(8.0)	$	22.0

____________________________

(1)Related to book-to-tax differences recorded upon the vesting of restricted incentive units.

(2)Oklahoma House Bill 2960 resulted in a change in the corporate income tax rate from 6% to 4%, effective January 1, 2022. Accordingly, we recorded deferred tax expense in the amount of $7.6 million for the three and six months ended June 30, 2021 due to a remeasurement of deferred tax assets.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax liabilities, net of deferred tax assets, are included in “Deferred tax liability, net” in the consolidated balance sheets. As of June 30, 2021, we had $118.7 million of deferred tax liabilities, net of $439.6 million of deferred tax assets, which included a $155.5 million valuation

allowance. As of December 31, 2020, we had $108.6 million of deferred tax liabilities, net of $396.0 million of deferred tax assets, which included a $153.3 million valuation allowance.

A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized. We established a valuation allowance of $153.3 million as of December 31, 2020, primarily related to federal and state tax operating loss carryforwards for which we do not believe a tax benefit is more likely than not to be realized. For the three and six months ended June 30, 2021, we recorded a $1.0 million and $2.2 million valuation allowance adjustment, respectively. As of June 30, 2021, management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of valuation allowance.