Income Taxes

Reconciliations of the statutory U.S. federal income tax rates to our effective tax rate for continuing operations follow:



	Years Ended December 31,
	2015		2014		2013
Statutory rate	35.0	%	35.0	%	35.0	%
State tax, net of federal benefit	3.0		2.9		2.6
Impact of state rate change on net deferred tax liabilities, net of federal benefit	0.5		4.4		—
State, valuation allowance adjustments on net operating losses	(0.2	)	(4.0	)	—
Unrecognized tax benefits, U.S. federal and state, net of federal benefit	(0.5	)	4.8		—
Other, net	(0.3	)	(1.2	)	0.6
Effective tax rate	37.5	%	41.9	%	38.2	%

The effective tax rate varies from the statutory U.S. federal rate of 35 percent primarily due to the impact of state taxes, net of federal benefit, for the years ended December 31, 2015, 2014 and 2013.

Income tax expense consists of:



	December 31,
	2015			2014			2013
Current provision:
Federal	$	215,950		$	137,573		$	130,854
State	26,057			43,282			13,513
Total current provision	242,007			180,855			144,367
Deferred (benefit)/provision:
Federal	(69,546		)	(40,370		)	13,240
State	(7,681		)	(518		)	1,327
Total deferred (benefit)/provision	(77,227		)	(40,888		)	14,567
Provision for income tax expense	$	164,780		$	139,967		$	158,934

The tax effect of temporary differences that give rise to deferred tax assets and liabilities include the following:



	December 31,
	2015			2014
Deferred tax assets:
Loan reserves	$	45,082		$	33,570
Stock-based compensation plans	16,939			16,342
Deferred revenue	209			418
Operating loss and credit carryovers	16,106			14,324
Unrealized losses	9,949			7,185
Accrued expenses not currently deductible	10,696			10,606
Unrecorded tax benefits	15,251			19,798
Other	9,871			8,918
Total deferred tax assets	124,103			111,161
Deferred tax liabilities:
Gains on repurchased debt	190,936			251,671
Fixed assets	6,237			5,849
Acquired intangible assets	6,724			6,151
Student loan premiums and discounts, net	—			3,050
Other	1,794			2,656
Total deferred tax liabilities	205,691			269,377
Net deferred tax (liabilities) assets	$	(81,588	)	$	(158,216	)

Included in operating loss carryovers is a valuation allowance of $83.7 million as of December 31, 2015, against a portion of our state net operating loss carryovers that management believes is more likely than not will expire prior to being realized. As of December 31, 2015, we have apportioned state net operating loss carryforwards of $25.6 million which begin to expire in 2029.

Accounting for Uncertainty in Income Taxes

The following table summarizes changes in unrecognized tax benefits:



	December 31,
	2015			2014			2013
Unrecognized tax benefits at beginning of year	$	59,405		$	7,344		$	3,951
Increases resulting from tax positions taken during a prior period	3,456			45,184			574
Decreases resulting from tax positions taken during a prior period	(10,121		)	—			—
Increases resulting from tax positions taken during the current period	3,447			7,713			2,819
Decreases related to settlements with taxing authorities	(7,481		)	(236		)	—
Reductions related to the lapse of statute of limitations	(1,597		)	(600		)	—
Unrecognized tax benefits at end of year	$	47,109		$	59,405		$	7,344

As of December 31, 2015, the gross unrecognized tax benefits are $47.1 million. Included in the $47.1 million are $25.2 million of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate. As a part of the Spin-Off, the Company recorded a liability related to uncertain tax positions for which it is indemnified by Navient. See Note 2, “Significant Accounting Policies - Income Taxes,” for additional details.

Tax related interest expense is reported as a component of income tax expense. As of December 31, 2015 and 2014, the total amount of income tax-related accrued interest, net of related benefit, recognized in the consolidated balance sheets was $7.0 million and $5.9 million, respectively.

For the years ended December 31, 2015, 2014 and 2013, the total amount of income tax-related accrued interest, net of related tax benefit, recognized in the consolidated statements of income was $1.4 million, $2.3 million and $0.1 million, respectively.

The Company or one of its subsidiaries files income tax returns at the U.S. federal level and in most U.S. states. U.S. federal income tax returns filed for years 2010 and prior have either been audited or surveyed and are now resolved. Various combinations of subsidiaries, tax years, and jurisdictions remain open for review, subject to statute of limitations periods (typically 3 to 4 prior years). We do not expect the resolution of open audits to have a material impact on our unrecognized tax benefits.