20. Income Taxes

We are not a taxable entity for federal income tax purposes. As such, we do not directly pay federal income taxes. Other than with respect to our corporate subsidiaries and the Texas Margin Tax, our taxable income or loss is includible in the federal income tax returns of each of our partners.

A few of our operations are owned by wholly-owned corporate subsidiaries that are taxable as corporations. We pay federal and state income taxes on these operations.

Our income tax (benefit) expense is as follows:



	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	(8,463	)	$	2,147		$	1,664
State	275			676			1,494
Total current income tax (benefit) expense	$	(8,188	)	$	2,823		$	3,158
Deferred:
Federal	$	(1,035	)	$	(3,714	)	$	(573	)
State	18			(326		)	3
Total deferred income tax (benefit) expense	$	(1,017	)	$	(4,040	)	$	(570	)
Total income tax (benefit) expense	$	(9,205	)	$	(1,217	)	$	2,588

Deferred income taxes relate to temporary differences based on tax laws and statutory rates in effect at the balance sheet date. Deferred tax assets and liabilities consist of the following:



	December 31,
	2012			2011
Deferred tax assets:
Current:
Other current assets	$	348		$	351
Other	8			8
Total current deferred tax asset	356			359
Net operating loss carryforwards	5,206			2,363
Total long-term deferred tax asset	5,206			2,363
Valuation allowances	(543		)	(428		)
Total deferred tax assets	$	5,019		$	2,294
Deferred tax liabilities:
Current:
Other	$	(658	)	$	(211	)
Long-term:
Fixed assets	(4,914		)	(5,744		)
Intangible assets	(8,896		)	(6,805		)
Total long-term liability	(13,810		)	(12,549		)
Total deferred tax liabilities	$	(14,468	)	$	(12,760	)
Total net deferred tax liability	$	(9,449	)	$	(10,466	)

We record a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character in the future and in the appropriate taxing jurisdictions.

Our income tax (benefit) expense varies from the amount that would result from applying the federal statutory income tax rate to income (loss) before income taxes as follows:



	Year Ended December 31,
	2012			2011			2010
Income (loss) before income taxes	$	87,114		$	50,032		$	(47,953	)
Partnership (income) loss not subject to tax	(89,797		)	(60,304		)	47,357
Loss subject to income taxes	$	(2,683	)	$	(10,272	)	$	(596	)
Tax benefit at federal statutory rate	$	(939	)	$	(3,595	)	$	(209	)
State income taxes, net of federal benefit	460			123			583
Effects of unrecognized tax positions, federal and state	(8,205		)	1,964			1,909
Return to provision, federal and state	(166		)	72			257
Other	(355		)	219			48
Income tax (benefit) expense	$	(9,205	)	$	(1,217	)	$	2,588
Effective tax rate on income (loss) before income taxes	(1)			(1)			(1)


(1)	Income tax expense is related to taxable income generated by our corporate subsidiaries and Texas Margin Tax. Due to the income tax benefit in 2012 and 2011 and the loss before income taxes in 2010, the effective tax rate as a percentage of our total income (loss) before income taxes is not meaningful.

A reconciliation of the beginning and ending amount of our unrecognized tax positions was as follows:



Balance at January 1, 2010	$	4,332
Additions based on tax positions related to current year	1,909
Balance as of December 31, 2010	6,241
Additions based on tax positions related to current year	1,964
Balance as of December 31, 2011	8,205
Reversal of uncertain tax positions due to tax audit settlements	(8,205		)
Balance as of December 31, 2012	$	—

In 2012, we reversed $8.2 million of uncertain tax positions and recognized an income tax benefit in the Consolidated Statements of Operations as a result of tax audit settlements and the expiration of statutes of limitations. These uncertain tax positions were included in Other Long-Term Liabilities in our Consolidated Balance Sheet at December 31, 2011.