Income Taxes

Since inception, the Company has operated solely within the United States.

The following summarizes the (provision) benefit from income taxes (in thousands):



	Year Ended December 31,			Year Ended December 31,			Year Ended December 31,
	2015			2014			2013
Current
Federal	$	(15,296	)	$	(13,284	)	$	(12,156	)
State	(3,350		)	(2,691		)	(1,132		)
Deferred
Federal	(5,259		)	(4,748		)	74,000
State	(2,901		)	(3,074		)	21,590
	$	(26,806	)	$	(23,797	)	$	82,302

Income taxes differ from the amounts computed by applying the applicable federal statutory rates due to the following (in thousands):



	Year Ended December 31,			Year Ended December 31,			Year Ended December 31,
	2015			2014			2013
(Provision) benefit for federal income taxes at the statutory rate	$	(30,473	)	$	(27,413	)	$	(18,656	)
Increases/(decreases) in tax resulting from:
Provision for state income taxes, net of federal income tax benefits	(4,063		)	(3,784		)	13,297
Change in valuation allowance	1,626			1,629			153,526
Domestic production activities deduction	2,087			1,228			618
Nondeductible items-other	(52		)	(84		)	(105		)
Non-controlling interests	1,024			3,465			2,265
Change in RBIL estimate	1,771			—			—
Cancellation of indebtedness attribute reduction	—			(4		)	(70,993		)
Tax credits	1,272			316			—
Other, net	2			850			2,350
	$	(26,806	)	$	(23,797	)	$	82,302

Temporary differences giving rise to deferred income taxes consist of the following (in thousands):



	December 31,
	2015			2014
Deferred tax assets
Impairment and other reserves	$	58,991		$	65,063
Compensation deductible for tax purposes when paid	9,124			9,130
Goodwill and other intangibles	129			2,582
AMT credit carryover	1,384			1,384
Unused recognized built-in loss	19,053			27,645
Net operating loss	4,430			1,776
Valuation allowance	—			(1,626		)
Other	1,378			1,556
	94,489			107,510
Deferred tax liabilities
Effect of book/tax differences for joint ventures	(3,537		)	(2,974		)
Effect of book/tax differences for capitalized interest/general and administrative	(14,566		)	(13,203		)
Fixed assets and intangibles	(755		)	(2,104		)
Other	4,095			(1,190		)
	(14,763		)	(19,471		)
Total deferred tax assets, net	$	79,726		$	88,039

The Company’s effective income tax rate was 30.8%, and 30.4% for the twelve months ended December 31, 2015 and 2014, respectively. The significant drivers of the effective tax rate are allocation of income to noncontrolling interests, related party loss recapture, domestic production activities deduction, state income taxes, and release of valuation allowance.

Management assesses its deferred tax assets to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. The Company is required to establish a valuation allowance for any portion of the asset that management concludes is more likely than not to be unrealizable. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.The Company's assessment considers all evidence, both positive and negative, including the nature, frequency and severity of any current and cumulative losses, taxable income in carry back years, the scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income in making this assessment. At December 31, 2015 the Company had no valuation allowance recorded. During the year ended December 31, 2013, the Company recognized a $95.6 million income tax benefit that resulted from the reversal of all but $4.0 million of our deferred tax asset valuation allowance. The Company concluded this reversal was appropriate after determining that it was more likely than not that we would be able to realize the full amount of this income tax benefit as management believes the Company will generate sufficient taxable income to realize these deferred tax assets.

The Company's analysis demonstrated that even under the stress tested forecasts of future results which considered the potential impact of the negative evidence noted above, the Company would continue to generate sufficient taxable income in future periods to realize the majority of its deferred tax assets. This fact, coupled with other positive evidence described above, significantly outweighed the negative evidence and based on this analysis management concluded, in accordance with ASC 740, that it was more likely than not that the majority of its deferred tax assets as of December 31, 2013 would be realized. At December 31, 2015, the Company had $2.1 million remaining federal net operating loss carryforwards and $68.7 million remaining state net operating loss carryforwards. State net operating loss carryforwards begin to expire in 2015. In addition, as of December 31, 2015, the Company had unused federal and state built-in losses of $53.2 million and $28.1 million, respectively. The 5 year testing period for built-in losses expires in 2017 and the unused built-in loss carryforwards begin to expire at the end of 2032. The Company had AMT credit carryovers of $1.4 million at December 31, 2015, which had an indefinite life.

ASC 740 prescribes a recognition threshold and a measurement criterion for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be considered more likely than not to be sustained upon examination by taxing authorities. The Company records interest and penalties related to uncertain tax positions as a component of the provision for income taxes. As of December 31, 2015 and 2014, the Company had no significant uncertain tax positions.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Due to the Company’s net operating losses incurred, the Company is subject to U.S. federal and state income tax examinations by for years subsequent to 2010 and 2007 respectively. The Company does not have any tax examinations currently in progress.