Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes included the following components:

(in millions)	2019		2018		2017
Current:
Federal	$	(1)	$	(5)	$	(22)
State	(1)		6		—
	(2)		1		(22)
Deferred:
Federal	(431)		—		(71)
State	22		—		—
	(409)		—		(71)
Provision (benefit) for income taxes	$	(411)	$	1	$	(93)

Reconciliation of Provision for Income Taxes

The

following reconciles the provision for income taxes included in the consolidated statements of operations with the provision which would result from application of the statutory federal tax rate to pre-tax financial income: 

(in millions)	2019		2018		2017
Expected provision at federal statutory rate	$	101	$	113	$	333
Decrease resulting from:
State income taxes, net of federal income tax effect	11		13		16
Rate impacts due to tax reform	—		—		370
Changes to valuation allowance due to tax reform	—		—		(370)
AMT tax reform impact – valuation allowance release	—		—		(68)
Changes in uncertain tax positions	—		—		(5)
Change in valuation allowance	(522)		(121)		(364)
Removal of sequestration fee on AMT receivables	—		(5)		—
Other	(1)		1		(5)
Provision (benefit) for income taxes	$	(411)	$	1	$	(93)

Components of Deferred Tax Balances

The components of the Company’s deferred tax balances as of December 31, 2019 and 2018 were as follows:

(in millions)	2019		2018
Deferred tax liabilities:
Differences between book and tax basis of property	$	312	$	226
Derivative activity	34		12
Right of use lease asset	37		—
Other	2		2
	385		240
Deferred tax assets:
Accrued compensation	33		33
Accrued pension costs	9		10
Asset retirement obligations	13		15
Net operating loss carryforward	769		777
Future lease payments	37		—
Other	18		14
	879		849
Valuation allowance	(87)		(609)
Net deferred tax asset	$	407	$	—

T

Reconciliation of Changes to the Valuation Allowance

A reconciliation of the changes to the valuation allowance is as follows:

(in millions)
Valuation allowance as of December 31, 2018	$	609
Release of valuation allowance in 2019	(522)
Valuation allowance as of December 31, 2019	$	87

Reconciliation of Beginning and Ending Balances of Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:

(in millions)	2019		2018
Unrecognized tax benefits at beginning of year	$	7	$	12
Additions based on tax positions related to the current year	—		—
Additions to tax positions of prior years	—		—
Reductions to tax positions of prior years	(7)		(5)
Unrecognized tax benefits at end of year	$	—	$	7