Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES We recorded an income tax provision of $440 million and $2.1 billion during the three and nine months ended September 30, 2023, respectively, which was calculated using the annual effective tax rate method. We recorded an income tax benefit of $752 million and $762 million during the three and nine months ended September 30, 2022, which was calculated using the year-to-date effective tax rate method.
Our effective tax rate was 17.4% and 17.2% for the three and nine months ended September 30, 2023, respectively, and 22.1% and 23.3% for the three and nine months ended September 30, 2022, respectively. The effective tax rate for the three and nine months ended September 30, 2023 represents a tax provision and was lower than the statutory rate of 21% primarily
due to CQP’s income that is not taxable to us. The effective tax rate for the three and nine months ended September 30, 2022 represents a tax benefit and was higher than the statutory rate of 21% primarily due to the foreign derived intangible income (“FDII”) deduction, which results in income from our sales to foreign customers being taxed at a lower effective tax rate. The year-to-date effective tax rate method was used for the three and nine months ended September 30, 2022 because a relatively small change in estimated ordinary income or loss caused significant changes to the estimated annual effective tax rate such that the annual effective tax rate did not provide a reliable estimate.
In August 2022, President Biden signed into U.S. federal law the Inflation Reduction Act which, among other things, introduced a new 15% corporate alternative minimum tax (“CAMT”), effective in 2023, that is based on 15% of an applicable corporation’s adjusted financial statement income (“AFSI”). A corporation is subject to the CAMT if its average AFSI over three prior years is greater than $1 billion (“Applicable Corporation”). We expect to become an Applicable Corporation beginning in 2024, but such timing is dependent on future earnings and the resultant impact of any future regulatory guidance issued by the U.S. Department of the Treasury and the Internal Revenue Service. The CAMT may accelerate and cause volatility in our cash tax payment obligations, particularly in periods of significant commodity, currency or financial market variability resulting in potential changes in the fair value of our derivative instruments.
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