INCOME TAXES

The components of the provision for income taxes for income from operations are as follows (in millions):



	Year Ended December 31, 2015			Year Ended January 1, 2015		Year Ended December 26, 2013
Federal:
Current	$	91.1		$	53.8	$	98.7
Deferred	(8.1		)	4.4		(11.0		)
Total Federal	83.0			58.2		87.7
State:
Current	19.9			13.0		20.1
Deferred	(2.8		)	2.2		(0.8		)
Total State	17.1			15.2		19.3
Total income tax provision	$	100.1		$	73.4	$	107.0

During the years ended December 31, 2015, January 1, 2015 and December 26, 2013, a current tax benefit of $1.8 million, $1.6 million and $1.3 million, respectively, was allocated directly to stockholders' equity for compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes.

A reconciliation of the provision for income taxes as reported and the amount computed by multiplying the income before taxes and extraordinary item by the U.S. federal statutory rate of 35% was as follows (in millions):



	Year Ended December 31, 2015		Year Ended January 1, 2015		Year Ended December 26, 2013
Provision calculated at federal statutory income tax rate	$	88.7	$	62.5	$	92.6
State and local income taxes, net of federal benefit	11.1		9.7		12.5
Other	0.3		1.2		1.9
Total income tax provision	$	100.1	$	73.4	$	107.0

Significant components of the Company's net deferred tax asset consisted of the following at (in millions):



	December 31, 2015			January 1, 2015
Deferred tax assets:
Net operating loss carryforward	$	52.7		$	59.3
Excess of tax basis over book basis of fixed assets	36.8			13.1
Deferred revenue	176.9			177.4
Deferred rent	64.5			55.4
Other	16.0			16.3
Total deferred tax assets	346.9			321.5
Valuation allowance	(34.9		)	(34.8		)
Total deferred tax assets, net of valuation allowance	312.0			286.7
Deferred tax liabilities:
Excess of book basis over tax basis of intangible assets	(42.5		)	(32.0		)
Excess of book basis over tax basis of investments	(201.4		)	(200.3		)
Other	(9.7		)	(11.8		)
Total deferred tax liabilities	(253.6		)	(244.1		)
Net deferred tax asset	$	58.4		$	42.6

At December 31, 2015, the Company had net operating loss carryforwards for federal income tax purposes of approximately $102.1 million with expiration commencing in 2016. The Company's net operating loss carryforwards were generated by the entities of United Artists, Edwards and Hollywood Theaters. The Tax Reform Act of 1986 imposed substantial restrictions on the utilization of net operating losses in the event of an "ownership change" of a corporation. Accordingly, the Company's ability to utilize the net operating losses acquired from United Artists, Edwards and Hollywood Theaters may be impaired as a result of the "ownership change" limitations. The Company’s state net operating losses may be carried forward for various periods, between seven and 20 years, with expiration commencing in 2016. The Company also has net operating losses in U.S. territorial jurisdictions with expirations commencing in 2019.

In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. The Company has recorded a valuation allowance against deferred tax assets of $34.9 million and $34.8 million as of December 31, 2015 and January 1, 2015, respectively, as management believes it is more likely than not that certain deferred tax assets will not be realized in future tax periods. Future reductions in the valuation allowance associated with a change in management's determination of the Company's ability to realize these deferred tax assets will result in a decrease in the provision for income taxes. During the year ended December 31, 2015, the valuation allowance was increased by $0.1 million related to management's determination that it was more likely than not that certain state net operating losses created in prior years would not be realized.

In accordance with the provisions of ASC Subtopic 740-10, a reconciliation of the change in the amount of unrecognized tax benefits during the years ended December 31, 2015 and January 1, 2015 was as follows (in millions):



	Year Ended December 31, 2015			Year Ended January 1, 2015
Beginning balance	$	13.6		$	13.6
Decreases related to prior year tax positions	(0.5		)	—
Increases related to current year tax positions	0.2			0.6
Lapse of statute of limitations	(0.2		)	(0.6		)
Ending balance	$	13.1		$	13.6

Exclusive of interest and penalties, it is reasonably possible that gross unrecognized tax benefits associated with state tax positions will decrease between $2.2 million and $4.5 million within the next twelve months primarily due to the expiration of the statute of limitations and settlement of tax disputes with taxing authorities.

The total net unrecognized tax benefits that would affect the effective tax rate if recognized at December 31, 2015 and January 1, 2015 was $6.8 million and $7.1 million, respectively. Additionally, the total net unrecognized tax benefits that would result in an increase to the valuation allowance if recognized at December 31, 2015 and January 1, 2015 was approximately $1.7 million.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2015 and January 1, 2015, the Company has accrued gross interest and penalties of approximately $2.2 million and $2.0 million, respectively. The total amount of interest and penalties recognized in the statement of income for the years ended December 31, 2015, January 1, 2015 and December 26, 2013 was $0.3 million, $0.2 million and $0.0 million, respectively.

The Company and its subsidiaries collectively file income tax returns in the U.S. federal jurisdiction and various state and U.S. territory jurisdictions. The Company is not subject to U.S. federal, state or U.S. Territory examinations for years before 2011. However, the taxing authorities still have the ability to review the propriety of tax attributes created in closed tax years if such tax attributes are utilized in an open tax year. During the year ended December 31, 2015, the Internal Revenue Service (“IRS”) closed an examination of the Company’s 2010 and 2012 federal income tax returns and notified the Company that no items were being disputed.