Income Taxes

12 Months Ended

Dec. 31, 2019

Note 16. Income Taxes

We are not a taxable entity for United States federal income tax purposes or for the majority of states that impose an income tax. Taxes are generally borne by our partners through the allocation of taxable income and we do not record deferred taxes related to the aggregate difference in the basis of our assets for financial and tax reporting purposes. We are subject to a Texas margin tax due to our operations in the Delaware Basin and we recorded a de minimis state tax provision for the years ended December 31, 2019, December 31, 2018 and December 31, 2017.

For periods prior to the Drop-Down and Simplification Transaction, our consolidated financial statements include a provision for tax expense on income related to the assets contributed to the Partnership. Deferred federal and state income taxes were provided on temporary differences between the financial statement carrying amounts of recognized assets and liabilities and their respective tax bases as if the Partnership filed tax returns as a stand-alone entity. The following table presents our tax provision for the periods indicated:



	Year Ended December 31,
(in thousands)	2019			2018			2017
Current	$	541		$	1,323		$	1,221
Deferred	3,474			6,678			26,751
Tax Provision ⁽¹⁾	$	4,015		$	8,001		$	27,972
Effective Tax Rate	1.6		%	3.6		%	14.8		%


⁽¹⁾	A substantial portion of our tax provision represents federal income taxes associated with the assets contributed in the Drop-Down and Simplification Transaction.

Net deferred tax assets and liabilities were classified in the consolidated balance sheets as follows:



(in thousands)	December 31, 2019		December 31, 2018
Deferred Tax Asset⁽¹⁾	$	—	$	29,201
Deferred Tax Liability⁽²⁾	229		—


⁽¹⁾	Our deferred tax asset is recorded within other noncurrent assets in our consolidated balance sheets. See Note 2. Summary of Significant Accounting Policies and Basis of Presentation for a discussion of the elimination of our deferred tax asset and liability prior to the Drop-Down and Simplification Transaction.

⁽²⁾

Our deferred tax liability is recorded within other noncurrent liabilities in our consolidated balance sheets.