5. Income Taxes

Significant components of our deferred tax assets and liabilities at December 31, 2013 and 2012, were as follows:

	2013			2012

Current deferred tax assets:
Continuing care contracts	$	134		$	607
Allowance for doubtful accounts		2,376			1,559
Deferred gains on sale lease back transactions		1,383			1,278
Insurance reserves		1,188			1,015
Tax credits		352			465
Tax loss carry forwards		6,679			9,190
Other		1,746			1,220


Total current deferred tax assets before valuation allowance		13,858			15,334
Valuation allowance:		(454	)		(297	)


Total current deferred tax assets		13,404			15,037


Non-current deferred tax assets:
Continuing care contracts		592			228
Deferred gains on sale lease back transactions		735			981
Insurance reserves		2,880			2,919
Tax credits		14,883			11,264
Tax loss carry forwards		32,139			26,592
Impairment of securities		470			501
Depreciable assets		5,990			—
Other		1,054			1,431


Total non-current deferred tax assets before valuation allowance		58,743			43,916
Valuation allowance:		(3,149	)		(1,891	)


Total non-current deferred tax assets		55,594			42,025


Current deferred tax liabilities:
Employee stock grants		(115	)		(130	)
Non-current deferred tax liabilities:
Depreciable assets		—			(1,674	)
Lease expense		(11,401	)		(696	)
Goodwill		(1,173	)		(1,087	)
Identifiable intangibles/other liabilities		(1,190	)		(1,008	)


Total non-current deferred tax liabilities		(13,764	)		(4,465	)


Net deferred tax asset	$	55,119		$	52,467

The changes in our valuation allowance for deferred tax assets were as follows:

	Balance at Beginning of Period		Amounts Charged/ (Credited) To Expense			Amounts Charged Off, Net of Recoveries		Balance at End of Period

Year Ended December 31, 2011	$	59,238	$	(55,875	)	$	—	$	3,363




Year Ended December 31, 2012	$	3,363	$	(1,175	)	$	—	$	2,188




Year Ended December 31, 2013	$	2,188	$	1,415		$	—	$	3,603

During the fourth quarter of 2011, as prescribed by FASB ASC Topic 740, Accounting for Income Taxes, we evaluated the realizability of our net deferred tax assets, which include, among other things, our net operating losses and tax credits. We determined that it was more likely than not that we will realize the benefit of our deferred tax assets, and as a result, we recognized in the fourth quarter of 2011, an income tax benefit from continuing operations of $58,389, of which $59,763 was attributable to the partial reduction of our previously deferred income tax valuation allowance. During the third quarter of 2012, we released valuation allowances of $1,156 related to capital losses which were used to offset a capital gain incurred in the sale of our pharmacy business. We maintain a partial valuation allowance against certain deferred tax assets related to impaired investments. When we believe that we will more likely than not realize the benefit of these deferred tax assets, we will record deferred tax assets as an income tax benefit in our consolidated statements of operations, which will affect our results of operations.

As of December 31, 2013, our federal net operating loss carry forward, which begins to expire in 2026 if unused, was approximately $81,583, and our tax credit carry forward, which begins to expire in 2022 if unused, was approximately $15,235. We have an additional $278 of federal net operating losses not reflected in the deferred taxes table above, that are attributable to unvested stock grants which will be recorded as an increase to additional paid in capital once they are realized in accordance with FASB ASC Topic 718. Our net operating loss carry forwards and tax credit carry forwards are subject to audit and adjustments by the Internal Revenue Service.

For the year ended December 31, 2013, we recognized tax expense from continuing operations of $1,916, of which $1,141 represents current state tax expense that is payable without regard to our tax loss carry forwards. The current year tax provision also includes a tax benefit of $1,468 related to the work opportunity tax credit program that expired in 2012 and was retroactively reinstated on January 3, 2013 and extended by the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013. As prescribed by FASB ASC Topic 740, Accounting for Income Taxes, the effects of tax law changes are recognized in the period in which new legislation is enacted. The total effect of the reinstatement of work opportunity tax credits related to 2012 employee wages was required to be recorded as a component of income tax expense in continuing operations during the first quarter of 2013. We also recognized a tax benefit from discontinued operations of $3,539.

The provision (benefit) for income taxes from continuing operations is as follows:

	Years Ended December 31,

	2013			2012		2011
Current tax provision:
State	$	1,141		$	1,183	$	1,047


Total current tax provision		1,141			1,183		1,047
Deferred tax (benefit) provision:
Federal		(1,042	)		4,775		(44,384	)
State		1,817			1,140		(15,052	)


Total deferred tax provision (benefit)		775			5,915		(59,436	)


Total tax provision (benefit)	$	1,916		$	7,098	$	(58,389	)

The principal reasons for the difference between our effective tax (benefit) rate on continuing operations and the U.S. federal statutory income tax rate are as follows:

	For the years ended December 31,

	2013		2012		2011
Taxes at statutory U.S. federal income tax rate		35.0%		35.0%		35.0%
State and local income taxes, net of federal tax benefit		35.9%		8.7%		(12.9)%
Tax credits		(42.1)%		(4.2)%		(15.7)%
Change in valuation allowance		2.6%		0.1%		(348.1)%
Nondeductible meals and entertainment		1.7%		0.5%		0.5%
Nondeductible penalties		1.7%		0.7%		1.0%
Dividend received deduction		(1.1)%		(0.8)%		(0.9)%
Executive compensation		1.6%		0.3%		0.0%
Stock-based compensation		0.6%		0.1%		(1.2)%
Other differences, net		(0.2)%		(0.3)%		2.2%


Effective tax rate		35.7%		40.1%		(340.1)%

We utilize a two-step process for the measurement of uncertain tax positions that have been taken or are expected to be taken on a tax return. The first step is a determination of whether the tax position should be recognized in the financial statements. The second step determines the measurement of the tax position. A reconciliation of the beginning and ending amount of unrecognized tax benefits is summarized as follows for the years ended December 31, 2013, 2012 and 2011:

	For the years ended December 31,

	2013		2012		2011
Unrecognized tax benefits at January 1	$	1,086	$	893	$	—
Additions for tax positions of prior years		—		—		717
Additions for tax positions of current year		159		193		176


Unrecognized tax benefits at December 31	$	1,245	$	1,086	$	893

As of December 31, 2013, the total amount of unrecognized tax benefits totaled $1,245, none of which if recognized would decrease our effective tax rate in a future period. It is not expected that a significant amount of unrecognized tax benefits would be recognized in the next 12 months.

We recognize interest and penalties related to uncertain tax positions in income tax expense and such amounts were not material for the years ended December 31, 2013, 2012 and 2011.