NOTE 11. Income Taxes

The expense for income taxes reflected in the Consolidated Statements of Operations consisted of:


	For the year ended December 31,
(in millions)	2016		2015		2014
Current:
Federal	$	—	$	—	$	—
State		(0.1)		0.1		0.1
Foreign		(0.2)		(0.1)		(0.3)
Total current		(0.3)		—		(0.2)
Deferred:
Federal		(18.5)		(10.8)		(6.3)
State		0.5		1.6		(0.4)
Total deferred		(18.0)		(9.2)		(6.7)
Income tax expense	$	(18.3)	$	(9.2)	$	(6.9)

The Company’s effective tax rate was 37.6%, 27.5% and 27.3% for the years ended December 31, 2016, 2015 and 2014, respectively. The expense for income taxes differs from the amount computed by applying the U.S. federal income tax rate of 35% to income or loss before income taxes as follows:


	For the year ended December 31,
(in millions)	2016		2015		2014
Federal income tax expense	$	(17.0)	$	(11.4)	$	(8.9)
State income tax (expense) benefit, net of federal impact		(1.3)		0.1		(0.3)
State tax benefit due to change in state tax rate		0.6		1.5		—
Section 162(m) limitation		(0.3)		(0.7)		(0.5)
Other non-deductible items		(1.5)		(0.7)		(0.5)
Change in reserves related to settlement with tax authorities		—		—		2.4
Investment loss		—		2.6		—
Research and experimentation tax credit		1.3		1.9		1.4
Change in valuation allowance		—		(2.6)		0.5
Other		(0.1)		0.1		(1.0)
Income tax expense	$	(18.3)	$	(9.2)	$	(6.9)

The Company’s deferred tax assets and liabilities consisted of the following:


	As of December 31,
(in millions)	2016		2015
Long-term deferred tax assets (liabilities), net
Net operating and capital loss carryforwards	$	93.0	$	106.7
Research and development and other state tax credits		33.5		32.2
Foreign tax credits		6.2		6.1
Compensation accruals		10.1		3.7
Stock-based compensation		10.6		11.0
Deferred revenue		109.6		128.0
Fixed assets		(356.9)		(363.1)
Intangible assets		(27.1)		(6.5)
Other		1.8		0.3
Valuation allowance		(4.8)		(4.8)
Total long-term deferred tax liabilities, net	$	(124.0)	$	(86.4)

At December 31, 2016, the Company had net-operating-loss (“NOL”) carryforwards for federal and state income tax purposes of approximately $224.6 million and $439.8 million, respectively. Included in this NOL is approximately $5.7 million attributable to tax deductions related to equity compensation in excess of compensation recognized for financial reporting. If unused, the NOL carryforwards will begin to expire during the years 2018 to 2033. A portion of the Company’s NOL carryforwards are subject to the Internal Revenue Code Section 382 limitations. However, the Company expects to fully utilize all of its NOL carryforwards in future periods. At December 31, 2016, the Company had capital-loss carryforwards of $7.2 million, which have a full valuation allowance, as the Company does not anticipate generating capital gains to utilize these losses.

At December 31, 2016, the Company had foreign-tax-credit (“FTC”) carryforwards, federal- research- and development- (“R&D”) tax credits and state tax credits of approximately $6.2 million, $42.4 million and $1.8 million, respectively. If unused, the FTC carryforwards will expire between 2019 and 2025, and the R&D credit carryforwards will expire between 2019 and 2036.

A reconciliation of the Company’s unrecognized tax benefits is as follows:


(in millions)	2016		2015		2014
Balance as of January 1	$	10.4	$	9.6	$	11.5
Additions:
Current year tax positions		0.6		0.5		0.3
Prior year tax positions		—		0.3		0.2
Decreases:
Settlement with taxing authority		—		—		(2.4)
Balance as of December 31	$	11.0	$	10.4	$	9.6

The tax years 1998 through 2015 remain open to examination by the United States taxing jurisdictions to which we are subject. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. The Company did not have any accrued interest or penalties recorded at December 31, 2016. The Company does not anticipate a material change to the unrecognized tax benefits within the next 12 months. If any of the unrecognized tax benefits were recognized, it would favorably affect the Company’s effective tax rate in any future period. While management believes the Company has adequately provided for all tax positions, amounts asserted by taxing authorities could materially differ from its accrued positions as a result of uncertain and complex application of tax regulations. Additionally, the recognition and measurement of certain tax benefits includes estimates and judgment by management and inherently includes subjectivity. Accordingly, additional provisions on tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.