Note 12 - Income Taxes

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. Income Taxes

For the three and nine-month periods ended September 30, 2024 and 2023, our income tax expense and effective income tax rates were as follows (dollars in millions):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023
Income tax expense (benefit)	$	32		$	3		$	70		$	(3	)
Effective income tax rate		25	%		(8	)%		25	%		4	%

We estimate our differences between taxable income or loss and recorded income or loss on an annual basis. Our tax provision for each quarter is based upon these full year projections, which are revised each reporting period. These projections incorporate estimates of permanent differences between U.S. GAAP income or loss and taxable income or loss, state income taxes and adjustments to our liability for unrecognized tax benefits to adjust our statutory federal income tax rate of 21% to our effective income tax rate. For the nine-month period ended September 30, 2024, these estimates increased or decreased our statutory Federal income tax rate to our effective income tax rate of 25% as follows: state income taxes added 5%, permanent differences between our U.S. GAAP income and taxable income added 1% and changes to our reserve accounts reduced our rate by 2%. For the nine-month period ended September 30, 2023, these estimates increased or decreased our statutory federal income tax rate to our effective income tax rate of 4% as follows: state income taxes added 3%, permanent differences between our U.S. GAAP income and taxable income reduced our rate by 7% and discrete items further reduced our rate by 13%.

During the nine-months ended September 30, 2024, we made $130 million of federal and state income tax payments, net of refunds. During the fourth quarter of 2024, we anticipate making income tax payments, net refunds, of approximately $3 million. As of September 30, 2024, we have an aggregate of approximately $282 million of various state operating loss carryforwards, of which we expect that approximately $201 million will not be utilized due to section 382 limitations and those that will expire prior to utilization. After applying our state effective tax rate, this amount is included in our valuation allowance for deferred tax assets.