Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

    As of December 31, 2021, we had approximately $1.6 billion in net operating loss carryforwards (“NOL carryforwards”); however, we currently have a valuation allowance against this and substantially all of our other deferred tax assets. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. For the year ended December 31, 2021, we recorded an income tax expense of $1.0 million primarily driven by foreign withholding taxes. For the year ended December 31, 2020, we recorded an income tax benefit of $20.7 million primarily driven by an increase in our net operating loss carryforwards and the change in our indefinitely-lived goodwill due to the impairments. For the year ended December 31, 2019, we recorded an income tax benefit of $69.7 million primarily driven by a $64.2 million benefit associated with the partial release of our valuation allowance in connection with the recognition of deferred tax liabilities acquired as part of the Washington Acquisition. Management continues to conclude that we did not meet the “more likely than not” requirement in order to recognize deferred tax assets on the remaining amounts and a valuation allowance has been recorded for substantially all of our net deferred tax assets at December 31, 2021 and 2020.

    In connection with our emergence from bankruptcy on August 31, 2012, we experienced an ownership change as defined under Section 382 of the Code. Section 382 generally places a limit on the amount of NOL carryforwards and other tax attributes arising before an ownership change that may be used to offset taxable income after an ownership change. We believe that we have qualified for an exception to the general limitation rules under Code Section 382(l)(5) which provides for substantially less restrictive limitations on our NOL carryforwards. Our amended and restated certificate of incorporation places restrictions upon the ability of certain equity interest holders to transfer their ownership interest in us. These restrictions are

designed to provide us with the maximum assurance that another ownership change does not occur that could adversely impact our NOL carryforwards.

    We believe that any adjustment to our uncertain tax positions would not have a material impact on our financial statements given the Company’s deferred tax and corresponding valuation allowance position as of December 31, 2021.

    Our net taxable income must be apportioned to various states based upon the income tax laws of the states in which we derive our revenue. Our NOL carryforwards will not always be available to offset taxable income apportioned to the various states. The states from which our refining, logistics, and retail revenues are derived are not the same states in which our NOLs were incurred; therefore, we expect to incur state tax liabilities in connection with our refining, logistics, and retail operations.

    We will continue to assess the realizability of our deferred tax assets based on consideration of actual operating results. If sufficient positive evidence of improving actual operating results becomes available, the amount of the deferred tax asset considered more likely than not to be recognized would be increased with a corresponding reduction in income tax expense in the period recorded.

    Income tax expense (benefit) consisted of the following (in thousands):

	Year Ended December 31,
	2021		2020		2019
Current:
U.S.—Federal	$	—	$	—	$	(3,203)
U.S.—State	26		51		400
Foreign	1,255		125		—
Deferred:
U.S.—Federal	(223)		(20,509)		(58,461)
U.S.—State	(37)		(387)		(8,425)
Total	$	1,021	$	(20,720)	$	(69,689)

    Income tax expense was different from the amounts computed by applying U.S. Federal income tax rate to pretax income as a result of the following:

	Year Ended December 31,
	2021		2020		2019
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	—	%	0.1	%	(1.1)	%
Foreign taxes	(1.6)	%	—	%	—	%
Change in valuation allowance related to current activity	(20.1)	%	(14.0)	%	227.1	%
Permanent items	(0.6)	%	(2.3)	%	(4.3)	%
Provision to return adjustments and other	—	%	—	%	(1.4)	%
Actual income tax rate	(1.3)	%	4.8	%	241.3	%

    Deferred tax assets (liabilities) are comprised of the following (in thousands):

	December 31,
	2021		2020
Deferred tax assets:
Net operating loss	$	424,112	$	427,245
Intangible assets	1,912		2,958
Environmental credit obligations	40,097		25,994
Other	16,137		22,551
Total deferred tax assets	482,258		478,748
Valuation allowance	(421,387)		(411,422)
Net deferred tax assets	60,871		67,326
Deferred tax liabilities:
Inventory	9,820		10,328
Property and equipment	56,436		58,122
Investment in Laramie Energy	—		4,522
Total deferred tax liabilities	66,256		72,972
Total deferred tax liability, net	$	(5,385)	$	(5,646)

    We have NOL carryforwards as of December 31, 2021 of $1.6 billion for federal income tax purposes. If not utilized, the NOL carryforwards will expire during 2028 through 2036.