Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the year ended December 31, 2023, we recorded an income tax benefit of $115.3 million primarily driven by a non-cash deferred tax benefit of $277.7 million related to the release of a majority of the valuation allowance against our federal net deferred tax assets, partially offset by deferred tax expense from net operating loss utilization and state tax expense. For the year ended December 31, 2022, we recorded an income tax expense of $0.7 million primarily driven by an increase in state taxable income. For the year ended December 31, 2021, we recorded an income tax expense of $1.0 million primarily driven by foreign withholding taxes.

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.

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.

In the fourth quarter of 2023, we analyzed projections for our future taxable income and the absence of objective negative evidence, such as a cumulative loss in recent years. As a result of this analysis we determined that we have sufficient

positive evidence to release a majority of the valuation allowance against our federal net deferred tax assets and recognized a non-cash deferred tax benefit of $277.7 million for the year ended December 31, 2023. We retain a partial valuation allowance on a foreign tax credit and certain state deferred tax assets primarily as a result of apportionment factors from minimal activity in certain states impacting assessed likelihood of future realizability. We will continue to reassess whether the balance of the valuation allowance is appropriate on a quarterly basis and, given the totality of the facts and circumstances, both positive and negative, will adjust the remaining valuation allowance in future periods if the evidence supports doing so.

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

	Year Ended December 31,
	2023		2022		2021
Current:
U.S.—Federal	$	—	$	—	$	—
U.S.—State	10,883		362		26
Foreign	—		73		1,255
Deferred:
U.S.—Federal	(133,979)		236		(223)
U.S.—State	7,760		39		(37)
Total	$	(115,336)	$	710	$	1,021

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,
	2023		2022		2021
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	2.9	%	0.1	%	—	%
Foreign taxes	—	%	—	%	(1.6)	%
Change in valuation allowance related to current activity	(45.3)	%	(21.3)	%	(20.1)	%
Permanent items	0.4	%	0.4	%	(0.6)	%
Other	2.2	%	—	%	—	%
Actual income tax rate	(18.8)	%	0.2	%	(1.3)	%

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

	December 31,
	2023		2022
Deferred tax assets:
Net operating loss	$	244,243	$	308,457
Intangible assets	—		830
Environmental credit obligations	11,280		71,424
ROU Liabilities	87,686		89,879
Other	13,313		5,332
Total deferred tax assets	356,522		475,922
Valuation allowance	(52,755)		(330,456)
Net deferred tax assets	303,767		145,466
Deferred tax liabilities:
Inventory	2,681		5,891
Property and equipment	90,882		54,124
Intangible assets	511		—
ROU Assets	89,087		91,112
Total deferred tax liabilities	183,161		151,127
Total deferred tax assets (liabilities), net (1)	$	120,606	$	(5,661)

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(1)As of December 31, 2023, deferred tax assets (liabilities), net, is included in Other long-term assets on our consolidated balance sheets. As of December 31, 2022, deferred tax assets (liabilities), net, is included in Other liabilities on our consolidated balance sheets.

We have NOL carryforwards as of December 31, 2023 of $0.9 billion for federal income tax purposes. If not utilized, approximately $0.7 billion of our NOL carryforwards will expire during 2030 through 2037. Approximately $0.2 billion of our NOL carryforwards do not expire. We do not have any unrecognized tax benefits as of December 31, 2023.