Income Taxes

The Partnership is not a taxable entity for U.S. federal income tax purposes, and taxes are generally borne by unitholders through the allocation of taxable income. In connection with the initial public offering, Predecessor current and deferred tax liabilities of $104.0 million were eliminated upon consummation of the Partnership. As of December 31, 2018, the reported amounts of the Partnership’s assets and liabilities exceeded the tax basis by $58.7 million.

The provision for income taxes included in the Consolidated Statements of Operations for the periods presented relates to the Predecessor. The Predecessor is not a separate taxable entity for U.S. federal and certain states purposes, and its results are included in the consolidated income tax returns of Oasis Petroleum. The provision for income taxes recorded by the Predecessor was determined as if the Predecessor was a stand-alone taxpayer for the period prior to the initial public offering on September 25, 2017.

The Predecessor’s income tax expense consists of the following:



	Year Ended December 31,
	2017		2016
	(In thousands)
Current:
Federal	$	15,571	$	21,272
State	2,047		2,797
	17,618		24,069
Deferred:
Federal	4,631		772
State	609		16
	5,240		788
Total income tax expense	$	22,858	$	24,857

The reconciliation of income taxes calculated at the U.S. federal statutory rate to the Predecessor’s effective tax rate for the years presented is as follows:



	Year Ended December 31,
	2017					2016
	(%)		(In thousands)			(%)		(In thousands)
U.S. federal statutory rate	35.00	%	$	33,392		35.00	%	$	22,745
Earnings not subject to tax subsequent to the initial public offering	(12.83	)%	(12,239		)	—	%	—
State income taxes, net of federal income tax benefit	1.81	%	1,727			2.90	%	1,882
Other	(0.02	)%	(22		)	0.35	%	230
Annual effective tax rate	23.96	%	$	22,858		38.25	%	$	24,857