Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

(7)  Income Taxes

Income tax expense consisted of the following:

	Year Ended December 31,
(in thousands)	2021		2022		2023
Current income tax benefit	$	—		—		(6,377)
Deferred income tax expense		117,123		117,494		134,664
Total income tax expense	$	117,123		117,494		128,287

Income tax expense differs from the amount that would be computed by applying the U.S. statutory federal income tax rate of 21% to income before taxes as a result of the following:

	Year Ended December 31,
(in thousands)	2021		2022		2023
Federal income tax expense	$	94,235		93,185		105,015
State income tax expense, net of federal effect		21,375		20,891		18,740
Equity-based compensation		1,713		1,027		4,086
Change in valuation allowance		—		2,582		5
Other		(200)		(191)		441
Total income tax expense	$	117,123		117,494		128,287

Deferred income taxes reflect the impact of temporary differences between assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The tax effect of the temporary differences giving rise to net deferred income tax assets and liabilities is as follows:

	December 31,
(in thousands)	2022		2023
Deferred income tax assets:
NOL carryforwards	$	111,615		115,284
Equity-based compensation		2,766		2,864
Charitable contributions		2,582		2,587
Total deferred income tax assets		116,963		120,735
Valuation allowance		(2,582)		(2,587)
Deferred income tax assets, net		114,381		118,148
Deferred income tax liability:
Investment in Antero Midstream Partners		245,596		384,027
Total deferred income tax liability		245,596		384,027
Deferred income tax liability, net	$	(131,215)		(265,879)

In assessing the realizability of the deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will be realized based on a more-likely-than-not standard of judgment. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the Company’s temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon the projections of future taxable income over the periods in which the deferred income tax assets are deductible, management believed that the Company will not realize the benefits of certain of these deductible differences related to charitable contributions. As such, as of December 31, 2022 and 2023, the Company has recorded a valuation allowance of $3 million.

The calculation of the Company’s tax assets and liabilities involves uncertainties in the application of complex tax laws and regulations. The Company gives financial statement recognition to those tax positions that it believes are more-likely-than-not to be sustained upon examination by the IRS or state revenue authorities. As of December 31, 2022 and 2023, the Company did not have any uncertain tax positions.

As of December 31, 2023, the Company has U.S. federal and state NOL carryforwards before the effect of income taxes of $428 million and $496 million, respectively, which have no expiration date. During the year ended December 31, 2023, the audit of the Company’s 2019 tax year was closed by the IRS with no adjustments. Tax years 2020 through 2023 remain open to examination by the IRS. The Company and its subsidiaries file tax returns with various state taxing authorities and those returns remain open to examination for tax years 2019 through 2023.