(6) Income Taxes

The Company provides for income taxes using the liability method. Accordingly, deferred taxes are recorded for the differences between the tax and book basis that will reverse in future periods (in thousands).



	Years Ended December 31,
	2013			2012			2011
Current tax provision	$	7,789		$	1,742		$	1,772
Deferred tax (benefit)	(18,003		)	(8,384		)	(4,540		)
Tax benefit	$	(10,214	)	$	(6,642	)	$	(2,768	)

A reconciliation of the provision for income taxes is as follows (in thousands):



	Years Ended December 31,
	2013			2012			2011
Federal income tax on taxable corporation at statutory rate (35%)	$	(13,840	)	$	(6,692	)	$	(3,071	)
State income tax, net	(818		)	(396		)	(182		)
Non-deductible expenses	4,282			258			153
Other	162			188			332
Income tax benefit	$	(10,214	)	$	(6,642	)	$	(2,768	)

The principal component of the Company's net deferred tax liability is as follows (in thousands):



	Years Ended December 31,
	2013			2012
Deferred income tax assets:
Accrued expenses	$	1,251		$	1,455
Deferred transaction cost	—			863
Net operating loss carryforward—non-current	49,499			51,488
Investment in the Partnership	—			5,981
Other comprehensive income	61			—
Alternative minimum tax carry forward (AMT)	8			8
	50,819			59,795
Less: valuation allowance	—			(5,981		)
	50,819			53,814

Deferred income tax liabilities:
Property, plant, equipment, and intangible assets-current	—			(7,075		)
Property, plant, equipment, and intangible assets-long-term	(176,471		)	(184,889		)
Other Comprehensive income	—			(56		)
Other	(3,405		)	(2,424		)
	(179,876		)	(194,444		)
Net deferred tax liability	$	(129,057	)	$	(140,630	)

At December 31, 2013 the Company had a net operating loss carryforward of approximately $130.2 million that expires from 2027 through 2033. The Company also has various state net operating loss carryforwards of approximately $76.5 million which will begin expiring in 2027. Management believes that it is more likely than not that the future results of operations will generate sufficient taxable income to utilize these net operating loss carryforwards before they expire. Although the Company has generated net operating losses in the past, the Company expects to have future taxable income from its investment in the Partnership, generated by the remedial allocations of income among the unitholders and the income generated by operations including the effect of reversals of accelerated depreciation.

Deferred tax liabilities relating to property, plant, equipment and intangible assets represent, primarily, the Company's share of the book basis in excess of tax basis for assets inside of the Partnership. At December 31, 2012, the difference between the Company’s book and tax basis in its investment in the Partnership was a deferred tax asset of $6.0 million which was offset by a valuation allowance of $6.0 million. As of December 31, 2013, the difference between the Company’s book and tax basis in its investment in the Partnership was a deferred tax liability due to the changes in the Company’s investment as a result of the Partnership’s unit issuances during 2013. Since, the Company no longer has a deferred tax asset, the related $6.0 million valuation allowance was reversed during the year ended December 31, 2013. The Company adjusts its deferred tax liability with the offset to additional-paid-in-capital for changes in its investment in the Partnership due to unit issuances.

The Company adopted the provisions of FASB ASC 740-10-25-16 on January 1, 2007. A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows (In thousands):




Balance as of December 31, 2011	$	2,650
Decreases related to prior year tax positions	(383		)
Increases related to current year tax positions	320
Balance as of December 31, 2012	$	2,587
Decreases related to prior year tax positions	(712		)
Increases related to current year tax positions	519
Balance as of December 31, 2013	$	2,394

Unrecognized tax benefits of $2.4 million, if recognized, would affect the effective tax rate. It is unknown when this uncertain tax position will be resolved. In the event additional interest and penalties are incurred prior to resolution, per company policy, such penalties and interest will be recorded to income tax expense.

At December 31, 2013, tax years 2009 through 2013 remain subject to examination by the Internal Revenue Services and tax years 2008 through 2013 remain subject to examination by various state taxing authorities.