8. Income Taxes

The provision for income taxes from continuing operations for the years ended December 31, 2015, 2014 and 2013 consists of the following:

	2015		2014		2013
	(in thousands)
Current taxes:
Federal	$	142,576		161,863		131,000
State		12,800		14,206		12,197
Foreign		38		35		37

		155,414		176,104		143,234
Deferred taxes		(1,410)		728		(3,001)

Provision for income taxes	$	154,004		176,832		140,233

The following table reconciles the statutory federal income tax rate with our effective income tax rate from continuing operations for the years ended December 31, 2015, 2014 and 2013:

	2015		2014		2013
Statutory federal income tax rate		35.0%		35.0%		35.0%
State income taxes, net of federal tax benefits		2.0		2.1		2.2
State tax incentives		(0.1)		(0.2)		(0.1)
Valuation allowance on losses capital in nature		0.9		(1.0)		(1.8)
Other items		0.7		0.2		0.4

Effective income tax rate		38.5%		36.1%		35.7%

The tax effect of temporary differences that give rise to significant portions of deferred tax liabilities and deferred tax assets at December 31, 2015 and 2014 are as follows:

	2015		2014
	(in thousands)
Deferred tax liabilities:
Deferred sales commissions	$	(2,337)		(4,285)
Property and equipment		(9,775)		(10,335)
Benefit plans		(14,058)		(11,452)
Identifiable intangible assets		(13,705)		(12,562)
Prepaid expenses		(2,231)		(2,150)

Total gross deferred liabilities		(42,106)		(40,784)

Deferred tax assets:
Accrued compensation		11,015		9,098
Additional pension and postretirement liability		32,183		28,389
Other accrued expenses		5,851		5,789
Unrealized losses on investment securities and partnerships		7,426		1,043
Capital loss carryforwards		5,919		6,849
Nonvested stock		20,608		20,300
Unused state tax credits		1,470		992
State net operating loss carryforwards		5,666		5,718
Other		3,463		3,572

Total gross deferred assets		93,601		81,750
Valuation allowance		(18,803)		(13,476)

Net deferred tax asset	$	32,692		27,490

In 2013, a capital loss was realized on the sale of Legend. By law, the portion of this capital loss in excess of capital gains was carried forward to offset potential capital gains recognized in future years. The deferred tax asset, net of federal tax effect, relating to this capital loss carryforward as of December 31, 2015 and 2014 is $5.9 million and $6.8 million, respectively. The capital loss carryforward, if not utilized, will expire in 2018. Other deferred tax assets that could generate potential future capital losses if realized include unrealized losses on investment securities and partnerships of $7.4 million and $1.1 million as of December 31, 2015 and 2014, respectively. Due to the character of the losses and the limited carryforward period permitted by law upon realization, the Company may not realize the full tax benefit of the capital losses. Management believes it is not more likely than not that the Company will generate sufficient future capital gains to realize the full benefit of these capital losses and accordingly, a valuation allowance in the amount of $13.3 million and $7.9 million has been recorded at December 31, 2015 and 2014, respectively.

Certain subsidiaries of the Company have net operating loss carryforwards in certain states in which these companies file on a separate company basis. The deferred tax asset, net of federal tax effect, relating to these carryforwards as of December 31, 2015 and 2014 is approximately $5.7 million. The carryforwards, if not utilized, will expire between 2016 and 2035. Management believes it is not more likely than not that these subsidiaries will generate sufficient future taxable income in these states to realize the benefit of the net operating loss carryforwards and, accordingly, a valuation allowance in the amount of $5.5 million and $5.6 million has been recorded at December 31, 2015 and 2014, respectively.

During 2015, the valuation allowance increased $5.3 million. Unrealized losses on equity method investments and the trading securities portfolio increased the valuation allowance and income tax expense by $5.9 million. Depreciation in the fair value of the Company's available for sale securities portfolio increased the valuation allowance and accumulated other comprehensive loss by $1.8 million. These increases were partially offset by capital gain distributions from investments and realized capital gains on the sale of securities in the Company's investment portfolios, which decreased the valuation allowance and income tax expense by $2.4 million.

The Company has state tax credit carryforwards of $1.5 million and $1.0 million as of December 31, 2015 and 2014, respectively. Of these state tax credit carryforwards, $1.3 million will expire between 2024 and 2031 if not utilized and $0.2 million will expire in 2026 if not utilized. The Company anticipates these credits will be fully utilized prior to their expiration date.

As of January 1, 2015, the Company had unrecognized tax benefits, including penalties and interest, of $11.6 million ($8.3 million net of federal benefit) that, if recognized, would impact the Company's effective tax rate. As of December 31, 2015, the Company had unrecognized tax benefits, including penalties and interest, of $11.9 million ($8.7 million net of federal benefit) that, if recognized, would impact the Company's effective tax rate. The unrecognized tax benefits that are not expected to be settled within the next 12 months are included in other liabilities in the accompanying consolidated balance sheets; unrecognized tax benefits that are expected to be settled within the next 12 months are included in income taxes payable; and unrecognized tax benefits that reduce a net operating loss, similar tax loss, or tax credit carryforward are presented as a reduction to noncurrent deferred income taxes.

The Company's accounting policy with respect to interest and penalties related to income tax uncertainties is to classify these amounts as income taxes. As of January 1, 2015, the total amount of accrued interest and penalties related to uncertain tax positions recognized in the consolidated balance sheet was $3.5 million ($2.9 million net of federal benefit). A settlement in 2015 allowed for the reduction of penalties and interest, net of federal benefit, related to tax uncertainties of $ 0.1 million in the consolidated statement of income for the period ended December 31, 2015. The total amount of accrued penalties and interest related to uncertain tax positions at December 31, 2015 of $3.4 million ($2.8 million net of federal benefit) is included in the total unrecognized tax benefits described above.

The following table summarizes the Company's reconciliation of unrecognized tax benefits, excluding penalties and interest, for the years ended December 31, 2015, 2014 and 2013:

	2015		2014		2013
	(in thousands)
Balance at January 1	$	8,105		9,013		8,322
Increases during the year:
Gross increases—tax positions in prior period		1,401		433		644
Gross increases—current-period tax positions		700		656		1,355
Decreases during the year:
Gross decreases—tax positions in prior period		(308)		(192)		(71)
Decreases due to settlements with taxing authorities		(486)		(877)		(154)
Decreases due to lapse of statute of limitations		(964)		(928)		(1,083)

Balance at December 31	$	8,448		8,105		9,013

In the ordinary course of business, many transactions occur for which the ultimate tax outcome is uncertain. In addition, respective tax authorities periodically audit our income tax returns. These audits examine our significant tax filing positions, including the timing and amounts of deductions and the allocation of income among tax jurisdictions. During 2015, the Company settled three open tax years that were undergoing audit by a state jurisdiction in which the Company operates. During 2014, the Company settled six open tax years that were undergoing audit by state jurisdictions in which the Company operates. During 2013, the Company settled four open tax years that were undergoing audit by a state jurisdiction in which the Company operates. The 2012 through 2015 federal income tax returns are open tax years that remain subject to potential future audit. State income tax returns for all years after 2011 and, in certain states, income tax returns for 2011, are subject to potential future audit by tax authorities in the Company's major state tax jurisdictions.