Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. Previously, the Texas Comptroller selected the R&D credit calculations related to the 2014 and 2015 calendar years for audit. The state of Texas suspended examination of these years in order to perform a comprehensive review of audit procedures to provide consistency. During the fourth quarter of 2019, we received notice that Texas had completed its review of its procedures and initiated additional requests for information which has been submitted for their review. In early 2022, we were contacted by the State of Texas to schedule meetings to close the examinations. We do not expect any material changes from the results of the Texas audits. Our federal and Texas tax returns remain open for examination for the years 2017 through 2020. As of December 31, 2021 and 2020, respectively, we recognized no adjustments for uncertain tax positions or related interest and penalties.
On March 27, 2020, the CARES Act was enacted into law. The CARES Act provided stimulus measures to companies impacted by the COVID-19 pandemic, which included the ability to defer payment for employer payroll taxes, utilize net operating loss (“NOL”) carrybacks, increased the limitation on the deductibility of interest expense, technical corrections to allow accelerated tax depreciation on qualified improvement property, as well as allowing qualified businesses to apply for loans and grants. We filed carryback claims allowed under these provisions and have collected all amounts, including interest.
The provision (benefit) for income taxes from continuing operations consisted of the following:
Year ended December 31,
2021 2020 2019
(thousands of dollars)
Current federal benefit $ (552) $ (19,190) $ — 
Current state expense 173  86  91 
Deferred federal expense (benefit) (1,910) 15,140  (3,564)
Deferred state expense (benefit) (75) 1  (93)
Income tax expense (benefit) $ (2,364) $ (3,963) $ (3,566)
The difference between the year ended effective tax rate in income tax expense (benefit) and the Federal statutory rate of 21% is as follows:
2021 2020 2019
(thousands of dollars)
Income taxes at U.S. statutory rate $ 546  $ 211  $ (3,455)
State taxes, net of federal benefit 62  71  256 
Forgiveness of PPP Loans (1,286) —  — 
Net operating loss carryback —  (4,655) — 
Research and development credits —  (518) (203)
Permanent and other items (1,686) 928  (164)
Total tax benefit $ (2,364) $ (3,963) $ (3,566)
The significant differences in rate are primarily due to compensation limits, stock-based compensation, tax impact of law changes, research and development credits and forgiveness of PPP Loans.
Tax effects of temporary differences that give rise to significant portions of federal and state deferred tax assets and liabilities were as follows:
December 31,
2021 2020
(thousands of dollars)
Deferred tax liabilities:
Plant, pipeline and equipment $ (31,126) $ (31,119)
Other assets (29) (31)
Operating lease asset (1,712) (2,211)
Total deferred tax liabilities $ (32,867) $ (33,361)
Deferred tax assets:
Net operating loss carryforward 1,836  — 
Intangible assets 3,079  3,396 
Operating lease liability 1,712  2,211 
Stock-based compensation 1,070  956 
Mineral interests —  226 
Interest expense carryforward 253  — 
Inventory 263  146 
Other 129  135 
Gross deferred tax assets 8,342  7,070 
Valuation allowance —  (226)
Total net deferred tax assets $ 8,342  $ 6,844 
Net deferred tax liabilities $ (24,525) $ (26,517)
We had provided a valuation allowance in 2020 against our mineral interests deferred tax assets because of uncertainties regarding their realization. The mineral interest deferred tax asset and corresponding valuation allowance was removed in 2021 as a result of the sale of PEVM. See Note 11.