INCOME TAXES

The provisions for income taxes consist of the following:



	2016			2015			2014
Current expense (benefit):
Federal	$	(17,845	)	$	34,990		$	38,786
State	6,805			15,138			11,449
Total current (benefit) expense	(11,040		)	50,128			50,235
Deferred expense (benefit):
Federal	71,005			28,877			29,208
State	6,262			815			4,717
Investment tax credit amortization	(329		)	(336		)	(337		)
Total income tax expense	$	65,898		$	79,484		$	83,823

A reconciliation from the U.S. federal statutory tax rate to our effective tax rate is as follows:



	2016		2015		2014
U.S. federal statutory tax rate	35.0	%	35.0	%	35.0	%
Difference in tax rate due to:
State income taxes, net of federal	5.2		5.1		5.1
Other, net	0.2		(0.5	)	0.2
Effective tax rate	40.4	%	39.6	%	40.3	%

Pennsylvania utility ratemaking practice permits the flow through to ratepayers of state tax benefits resulting from accelerated tax depreciation. For Fiscal 2016, Fiscal 2015 and Fiscal 2014, the beneficial effects of state tax flow through of accelerated depreciation reduced tax expense by $1,344, $1,539 and $1,976, respectively.

Deferred tax liabilities (assets) comprise the following at September 30:



	2016			2015
Excess book basis over tax basis of property, plant and equipment	$	491,038		$	431,480
Goodwill	45,070			40,552
Derivative financial instruments	948			—
Regulatory assets	149,660			117,420
Other	2,910			2,573
Gross deferred tax liabilities	689,626			592,025
Pension plan liabilities	(74,129		)	(54,444		)
Allowance for doubtful accounts	(1,637		)	(2,809		)
Deferred investment tax credits	(1,356		)	(1,493		)
Employee-related expenses	(5,247		)	(5,637		)
Regulatory liabilities	(16,798		)	(23,958		)
Environmental liabilities	(22,757		)	(6,014		)
Derivative financial instruments	—			(3,501		)
Other	(17,473		)	(6,367		)
Gross deferred tax assets	(139,397		)	(104,223		)
Net deferred tax liabilities	$	550,229		$	487,802

We join with UGI and its subsidiaries in filing a consolidated federal income tax return. We are charged or credited for our share of current taxes resulting from the effects of our transactions in the UGI consolidated federal income tax return including giving effect to intercompany transactions. UGI’s federal income tax returns are settled through the tax year 2012.

We file separate company income tax returns in various other states but are subject to state income tax principally in Pennsylvania. Pennsylvania income tax returns are generally subject to examination for a period of three years after the filing of the respective returns.

During Fiscal 2016, Fiscal 2015 and Fiscal 2014, interest expense of $204, $0 and $39, respectively, was recognized in income taxes in the Consolidated Statements of Income.

As of September 30, 2016, we have unrecognized income tax benefits totaling $2,055 including related accrued interest of $204. If these unrecognized tax benefits were subsequently recognized, $711 would be recorded as a benefit to income taxes on the Consolidated Statement of Income and, therefore, would impact the reported effective tax rate. Generally, a net reduction in unrecognized tax benefits could occur because of the expiration of the statute of limitations in certain jurisdictions or as a result of settlements with tax authorities. There is no material change expected in unrecognized tax benefits and related interest in the next twelve months.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



	2016		2015		2014
Unrecognized tax benefits - beginning of year	$	—	$	—	$	1,087
Additions for tax positions of prior years	2,055		—		—
Additions for tax positions of the current year
Settlements with tax authorities	—		—		(1,087		)
Unrecognized tax benefits - end of year	$	2,055	$	—	$	—