XPLR Infrastructure, LPXIFR

XPLR Infrastructure, LP Income Taxes Disclosure

10-KFiled Feb 21, 20253 min read
Income Taxes
The components of income (loss) before income taxes are as follows:
Years Ended December 31,
202420232022
(millions)
Continuing operations$(457)$(257)$1,130 
Discontinued operations(a)
— 509 162 
Total income (loss) before income taxes$(457)$252 $1,292 
____________________
(a)    See Note 4.

The components of income tax expense (benefit) are as follows:
Years Ended December 31,
202420232022
(millions)
Federal:
Current$— $— $— 
Deferred(44)(28)118 
Total federal(44)(28)118 
State:
Current— — — 
Deferred(2)3 43 
Total state(2)3 43 
Income tax expense (benefit) from continuing operations(46)(25)161 
Income taxes from discontinued operations— 59 10 
Total income tax expense (benefit)$(46)$34 $171 

A reconciliation of the income tax expense (benefit) and effective tax rate based on the statutory U.S. federal income tax rate is as follows:
Years Ended December 31,
202420232022
(millions, except for percentages)
Income tax expense (benefit) at U.S. statutory rate of 21%$(96)21.0 %$(54)21.0 %$237 21.0 %
Increases (reductions) resulting from:
Taxes attributable to noncontrolling interests82 (17.9)54 (21.1)(110)(9.7)
State income taxes – net of federal income tax benefit
(1)0.2 2 (0.8)33 3.0 
Renewable energy tax credits(32)6.9 (28)11.1 (2)(0.2)
Valuation allowance1 (0.2)— — — — 
Other – net
— — 1 (0.4)3 0.1 
Income tax expense (benefit) and effective tax rate from continuing operations
$(46)10.0 %$(25)9.8 %$161 14.2 %

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These items are stated at the enacted tax rates that are expected to be in effect when taxes are actually paid or recovered. XPLR believes that it is more likely than not that the deferred tax assets at December 31, 2024 shown in the table below, net of the valuation allowances, will be realized due to sufficient future income.
The income tax effects of temporary differences giving rise to XPLR's deferred income tax liabilities and assets are as follows:
December 31,
20242023
(millions)
Deferred tax liabilities:
Investment in partnership(a)(b)
$(253)$(263)
Total deferred tax liabilities(253)(263)
Deferred tax assets:
Net operating loss carryforwards(b)
428 418 
Tax credit carryforwards23 41 
Valuation allowance(2)(3)
Total deferred tax assets449 456 
Net deferred income taxes$196 $193 
____________________
(a)    At December 31, 2024 and 2023, includes a deferred tax asset of approximately $19 million and $10 million, respectively, of interest limitation carryforward with an indefinite expiration period.
(b)    At December 31, 2024, excludes approximately $39 million of tax impacts relating to the 2023 tax year taxable gains of $154 million which were allocated to NEE Equity in March 2024. At December 31, 2023, excludes approximately $65 million of tax impacts relating to the 2023 tax year taxable gains which were to be allocated to NEE Equity and estimated to be $258 million. See Note 15 – Tax Allocations.

Deferred tax assets and liabilities included on XPLR's consolidated balance sheets are as follows:
December 31,
20242023
(millions)
Noncurrent other assets
$219 $215 
Noncurrent other liabilities(23)(22)
Net deferred income taxes$196 $193 

The components of deferred tax assets, before valuation allowance, relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2024 are as follows:
AmountExpiration Dates
(millions)
Net operating loss carryforwards:
Federal$370 2034 – 2037
State58 2028 – 2044
Total net operating loss carryforwards$428 
(a)
Tax credit carryforwards$23 2025 – 2044
____________________
(a)    Includes approximately $225 million and $7 million of federal and state, respectively, net operating loss carryforwards with an indefinite expiration period.

During 2024 and 2023, XPLR recorded state tax liabilities of approximately less than $1 million (net of federal tax benefit) in both periods related to unrecognized tax benefits of prior year state tax filing positions. The total amount of unrecognized tax benefit that, if recognized, would affect the effective tax rate is approximately $5 million (net of federal tax benefit). The open tax years in all jurisdictions are 2014 through 2023.
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Historical Timeline

Fiscal YearFiled
2024Feb 21, 2025Showing above
2023Feb 21, 2024
2022Feb 23, 2023
2021Feb 23, 2022
2020Feb 16, 2021

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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