Amplify Energy Corp. Income Taxes Disclosure

Note 18. Income Tax

Amplify Energy is a corporation and, as a result, is subject to U.S. federal, state, and local income taxes.

On July 4, 2025, the U.S. enacted legislation referred to as the One Big Beautiful Bill(“OBBBA”), which contains certain significant changes to U.S. corporate income tax laws that are generally effective for tax years beginning after December 31, 2024. These changes include, but are not limited to, the restoration of immediate expensing for domestic research and experimental (“R&E”) expenses, the option to retroactively deduct certain  previously capitalized R&E expenses, modifications to the business interest expense limitation, and the restoration of 100 percent bonus depreciation for qualified property placed in service after January 19, 2025. The impacts of the tax law changes from OBBBA are reflected in the Company’s 2025 income tax provision; however, the changes affect timing only and do not change the total tax provision for the year ended December 31, 2025.

The Company adopted improvements to income tax disclosure (ASU 2023-09) on January 1, 2025. The adoption of the guidance did not impact the Company's financial position, results of operations, or cash flows.

The components of income tax benefit (expense) are as follows:

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The actual income tax benefit (expense) differs from the expected amount computed by applying the federal statutory corporate tax rate of 21% for the year ended December 31, 2025, presented in accordance with the prospectively adopted ASU 2023-09 guidance, was as follows:

The actual income tax benefit (expense) differs from the expected amount computed by applying the federal statutory corporate tax rate of 21% in 2024 in accordance with the guidance prior to the adoption of ASU 2023-09 was as follows:

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The Company’s deferred income tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. Significant components of the deferred tax assets and liabilities are as follows (in thousands):

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Net Operating Loss Carryforward. In connection with the merger with Midstates Petroleum Company in 2019, the Company was subject to IRC §382 loss limitations on pre-merger net operating loss (“NOL”) and tax attributes. As of December 31, 2025, the Company’s federal NOL carryforward of $790.8 million is subject to §382 loss limitations, of which $20.9 million will expire in 2037 and $769.9 million have no expiration. As of December 31, 2025, the Company has $149.7 million federal post-merger NOL carryforward. All post-merger NOLs are not subject to §382 loss limitations and do not expire.

As of December 31, 2025, the Company had approximately $88.9 million of state net operating loss carryovers which have different expirations dates starting in 2037.

Valuation Allowance. In assessing deferred tax assets, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. The assessment considers all available information including, among other things, historical and forecasted taxable income and operating history, the scheduled reversal of deferred tax liabilities and available tax planning strategies. As of December 31, 2025, the Company had three years of cumulative book income. Furthermore, management determined that the Company’s ability to maintain long-term profitability despite near-term changes in commodity prices and capital and operating costs demonstrated that there is sufficient positive evidence to conclude that it is more likely than not that all net deferred tax assets are realizable.

Uncertain Income Tax Position. The Company must recognize the tax effects of any uncertain tax positions that the Company may adopt if the position taken by us is more likely than not sustainable based on its technical merits. For those benefits to be recognized, an income tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company had no unrecognized tax benefits as of December 31, 2025.

Tax Audits and Settlements. The Company’s income tax years 2022 through 2024 remain open and subject to examination by the Internal Revenue Service (IRS). For state and local jurisdictions where the Company conducts operations, the Company’s 2021 through 2024 tax years remain open and subject to examination. In certain jurisdictions where the Company operates through more than one legal entity, each of which may have different open years subject to examination.