Income Taxes

The components of the Company's income tax provision are summarized as follows (in thousands):



	December 31,
	2013		2012		2011
Current provision:
State	$	3,772	$	4,059	$	3,595
Foreign	81		—		466
	3,853		4,059		4,061
Deferred provision:
Federal	39,537		50,544		32,229
State	2,179		3,301		3,087
	41,716		53,845		35,316
	$	45,569	$	57,904	$	39,377

A reconciliation of the amounts computed by applying the statutory federal income tax rate to income before income taxes to the amounts recorded in the consolidated statements of comprehensive income is summarized as follows (in thousands):



	December 31,
	2013			2012			2011
Amounts computed at statutory federal rate	$	(195,259	)	$	(45,280	)	$	(97,405	)
Non-deductible expenses	282			477			376
State income tax expense, net of federal income tax impact	4,684			5,944			5,708
Net tax benefit related to joint ventures	(1,496		)	(6,737		)	(2,856		)
Non-deductible share-based compensation	3,637			5,776			6,623
Other	—			—			(2,936		)
Change in valuation allowance	233,721			97,724			129,867
	$	45,569		$	57,904		$	39,377

The components of the Company's deferred tax assets (liabilities) are summarized as follows (in thousands):



	As of December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryforwards	$	1,197,188		$	1,008,492
Wireless licenses	8,492			13,291
Capital loss carryforwards	14			—
Reserves and allowances	8,563			13,990
Share-based compensation	27,423			29,698
Deferred charges	54,026			49,898
Investments and deferred tax on unrealized losses	19,147			395
Intangible assets	12,473			15,502
Goodwill	26,245			28,546
Other	2,083			2,156
Gross deferred tax assets	1,355,654			1,161,968
Deferred tax liabilities:
Property and equipment	(148,214		)	(222,260		)
Other	(5,067		)	(242		)
Net deferred tax assets	1,202,373			939,466
Valuation allowance	(1,200,585		)	(937,568		)
Other deferred tax liabilities:
Wireless licenses	(422,202		)	(378,876		)
Investment in joint ventures	—			(1,653		)
Net deferred tax liabilities	$	(420,414	)	$	(378,631	)

Deferred tax assets (liabilities) are reflected in the accompanying consolidated balance sheets as follows (in thousands):



	As of December 31,
	2013			2012
Current deferred tax assets (included in other current assets)	$	4,032		$	6,480
Long-term deferred tax liabilities	(424,446		)	(385,111		)
	$	(420,414	)	$	(378,631	)

Except with respect to the $1.8 million and $1.9 million TMT credit outstanding as of December 31, 2013 and 2012, respectively, the Company established a full valuation allowance against its net deferred tax assets due to the uncertainty surrounding the realization of such assets. The valuation allowance is based on available evidence, including the Company's historical operating losses. Deferred tax liabilities associated with wireless licenses and investments in certain joint ventures cannot be considered a source of taxable income to support the realization of deferred tax assets because these deferred tax liabilities will not reverse until some indefinite future period. Since it has recorded a valuation allowance against substantially all of its deferred tax assets, the Company carries a net deferred tax liability on its balance sheet. During the year ended December 31, 2013, the Company recorded a $263.0 million increase to its valuation allowance, which primarily consisted of $232.0 million and $19.9 million related to changes in the federal and state net operating loss carryforwards, respectively. During the year ended December 31, 2012, the Company recorded a $90.2 million increase to its valuation allowance, which primarily consisted of $84.3 million and $5.9 million related to changes in the federal and state net operating loss carryforwards, respectively.

At December 31, 2013, the Company estimated it had federal and state NOL carryforwards of approximately $3.1 billion and $2.3 billion, respectively (which begin to expire in 2022 for federal income tax purposes and of which $92.8 million will expire at the end of 2014 for state income tax purposes). During the year ended December 31, 2013, $69.8 million of the Company's state NOLs expired. Included in the Company's federal and state net operating loss carryforwards are $32.0 million of losses which, when utilized, will increase additional paid-in capital by approximately $12.1 million.

The Company's ability to utilize NOLs could be limited if it were to experience an "ownership change," as defined in Section 382 of the Internal Revenue Code and similar state provisions. In general terms, an ownership change can occur whenever there is a cumulative shift in the ownership of a company by more than 50 percentage points by one or more "5% stockholders" within a three-year period. The occurrence of such a change in the Company's ownership would limit the amount of NOL carryforwards it could utilize in a given year. This limitation would accelerate cash tax payments the Company would be required to make and likely result in a substantial portion of its NOLs expiring before the Company could fully utilize them.

In 2011, trading in Leap common stock increased the risk of an ownership change under Section 382 of the Internal Revenue Code. Accordingly, on August 30, 2011, the Company’s board of directors adopted a Tax Benefit Preservation Plan to help deter acquisitions of Leap common stock that could result in an ownership change under Section 382 and thus help preserve the Company’s ability to use its NOL carryforwards. The Tax Benefit Preservation Plan is designed to deter acquisitions of Leap common stock that would result in a stockholder owning 4.99% or more of Leap common stock (as calculated under Section 382), or any existing holder of 4.99% or more of Leap common stock acquiring additional shares, by substantially diluting the ownership interest of any such stockholder unless the stockholder obtains an exemption from the Company’s board of directors.

None of the Company's NOL carryforwards are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of a Section 382 limitation will be removed from deferred tax assets with a corresponding reduction to the valuation allowance. Since the Company currently maintains a full valuation allowance against its federal and state NOL carryforwards, it does not expect that any possible limitation would have a current impact on its results of operations.

In accordance with the authoritative guidance for business combinations, which became effective for the Company on January 1, 2009, any reduction in the valuation allowance, including the valuation allowance established in fresh-start reporting, will be accounted for as a reduction of income tax expense.

The Company's unrecognized income tax benefits and uncertain tax positions, as well as any associated interest and penalties, are recorded through income tax expense; however, such amounts have not been significant in any period. All of the Company's tax years from 1998 to 2012 remain open to examination by federal and state taxing authorities. In July 2009, the federal examination of the Company's 2005 tax year, which was limited in scope, was concluded and the results did not have a material impact on the consolidated financial statements.