Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes

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

(in millions)	2020		2019		2018
Current:
Federal	$	(2)	$	(1)	$	(5)
State	—		(1)		6
	(2)		(2)		1
Deferred:
Federal	371		(431)		—
State	38		22		—
	409		(409)		—
Provision (benefit) for income taxes	$	407	$	(411)	$	1

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)	2020		2019		2018
Expected provision (benefit) at federal statutory rate	$	(568)	$	101	$	113
Increase (decrease) resulting from:
State income taxes, net of federal income tax effect	(55)		11		13
Change in valuation allowance	1,034		(522)		(121)
Removal of sequestration fee on AMT receivables	—		—		(5)
Other	(4)		(1)		1
Provision (benefit) for income taxes	$	407	$	(411)	$	1

Components of Deferred Tax Balances

The components of the Company’s deferred tax balances as of December 31, 2020 and 2019 were as follows:

(in millions)	2020		2019
Deferred tax liabilities:
Differences between book and tax basis of property	$	—	$	312
Derivative activity	—		34
Right of use lease asset	38		37
Other	2		2
	40		385
Deferred tax assets:
Differences between book and tax basis of property	295		—
Accrued compensation	38		33
Accrued pension costs	11		9
Asset retirement obligations	20		13
Net operating loss carryforward	1,117		769
Future lease payments	38		37
Derivative activity	9		—
Capital loss carryover	27		—
Other	24		18
	1,579		879
Valuation allowance	(1,539)		(87)
Net deferred tax asset	$	—	$	407

Reconciliation of Changes to the Valuation Allowance

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

(in millions)	2020		2019
Valuation allowance at beginning of year	$	87	$	609
Release of valuation allowance	—		(522)
Establishment of valuation allowance on opening deferred balance	408		—
Opening balance adjustments	6		—
Changes based on 2020 activity	626		—
Purchase accounting	412		—
Valuation allowance at end of year	$	1,539	$	87

Summary of Unrecognized Tax Benefits

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

(in millions)	2020		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