15. Income Taxes

The benefit (provision) for income taxes is comprised of the following (dollars in thousands):

	For the Years Ended December 31,
	2015			2014			2013
Federal:
Current	$	49		$	1,367		$	(312	)
Deferred		95,259			182,371			183
Total Federal		95,308			183,738			(129	)
State:
Current		(3,099	)		(2,433	)		(1,627	)
Deferred (included in Federal above)		—			—			—
Total State		(3,099	)		(2,433	)		(1,627	)
Total	$	92,209		$	181,305		$	(1,756	)

A reconciliation of the benefit (provision) for income taxes to the amount computed at the U.S. Federal statutory rate of 35% is as follows (dollars in thousands):

	For the Years Ended December 31,
	2015			2014			2013
Tax benefit at U.S. statutory rate	$	192,390		$	115,603		$	640
State taxes, net of federal income tax		18,323			11,582			(985	)
Tax credits		3,937			(2,222	)		9,757
Valuation allowance		(111,797	)		64,155			(7,097	)
Goodwill impairment		(7,856	)		—			—
Meals and entertainment		(1,090	)		(946	)		(496	)
Other, net		(1,626	)		(713	)		(1,007	)
Return to provision		(72	)		716			(2,568	)
Non-deductible transaction costs		—			(6,870	)		—
Total	$	92,209		$	181,305		$	(1,756	)

Significant components of the Company's deferred tax assets and liabilities at December 31 are as follows (dollars in thousands):

	2015			2014
Deferred income tax assets:
Capital and financing lease obligations	$	872,002		$	945,000
Operating loss carryforwards		282,075			227,956
Accrued expenses		144,691			146,536
Deferred lease liability		94,105			77,790
Tax credits		40,974			34,860
Intangible assets		22,522			17,785
Deferred gain on sale leaseback		5,661			7,073
Prepaid revenue		2,415			5,835
Total gross deferred income tax asset		1,464,445			1,462,835
Valuation allowance		(121,602	)		(9,213	)
Net deferred income tax assets		1,342,843			1,453,622
Deferred income tax liabilities:
Property, plant and equipment		(1,320,423	)		(1,556,603	)
Investment in unconsolidated ventures		(88,798	)		(54,113	)
Other		(2,673	)		(2,181	)
Total gross deferred income tax liability		(1,411,894	)		(1,612,897	)
Net deferred tax liability	$	(69,051	)	$	(159,275	)

As of December 31, 2015 and 2014, the Company had federal net operating loss carryforwards of approximately $930.4 million and $745.1 million, respectively, which are available to offset future taxable income through 2035. The Company determined that a valuation allowance was required due to the loss before income taxes in 2015, and in consideration of the Company's estimated future reversal of existing timing differences as of December 31, 2015. In the fourth quarter of 2015, the Company recorded a provision of approximately $111.8 million to reflect the necessary valuation allowance of $121.6 million as of December 31, 2015. The valuation allowance reflects that the Company's net operating losses will begin to expire in 2027.

As a result of the acquisition of Emeritus on July 31, 2014, the Company recorded deferred tax liabilities in excess of deferred tax assets that reflect the difference between the fair market value of the acquired assets over the historical basis of the acquired assets. During the year ended December 31, 2014, the Company determined that it was more likely than not that its federal net operating loss carryforwards and a majority of its state net operating loss carryforwards, and the majority of its tax credits will be utilized in the future, based on the future reversal of these deferred tax liabilities. As a result, during the year ended December 31, 2014 the Company recorded an aggregate deferred federal, state and local income tax benefit of $64.2 million from the release of the valuation allowance against certain deferred tax assets. Additionally, the Company recorded an aggregate deferred federal, state and local tax benefit of $94.1 million as a result of the operating loss for the year ended December 31, 2014.

The Company has recorded valuation allowances of $89.5 million and $7.5 million at December 31, 2015 and 2014, respectively, against its federal and state net operating losses, as the Company anticipates these losses will not be utilized prior to expiration. The Company also recorded a valuation allowance against federal and state credits of $32.1 million and $1.8 million as of December 31, 2015 and 2014, respectively. As of December 31, 2015 and 2014, the Company had $126.7 million and $112.6 million, respectively, included in its net operating loss carryforward relating to restricted stock grants. Under ASC 718-10, this loss will be recorded in additional paid-in capital in the period in which the loss is effectively used to reduce taxes payable.

The formation of the Company, the reorganization of a predecessor company and the acquisitions of several wholly-owned subsidiaries constituted ownership changes under Section 382 of the Internal Revenue Code, as amended. As a result, the Company's ability to utilize the net operating loss carryforward to offset future taxable income is subject to certain limitations and restrictions. Furthermore, the Company had an ownership change under Section 382 in May 2010 which resulted in an additional annual limitation to the utilization of the net operating loss in the amount of $92.8 million. The acquisition of Emeritus on July 31, 2014 resulted in an ownership change for Emeritus resulting in an annual limitation of $53.9 million on net operating losses acquired by the Company from Emeritus. The Company expects the net operating losses of the Company from prior to May 2010 and of Emeritus to be fully released before expiration and therefore does not anticipate a financial statement impact as a result of the limitations.

At December 31, 2015, the Company had gross tax affected unrecognized tax benefits of $30.2 million, which, if recognized, would result in an income tax benefit in accordance with ASC 805. Interest and penalties related to these tax positions are classified as tax expense in the Company's consolidated financial statements. Total interest and penalties reserved is $0.1 million at December 31, 2015. Tax returns for years 2011 through 2014 are subject to future examination by tax authorities. In addition, the net operating losses from prior years are subject to adjustment under examination. The Company does not expect that unrecognized tax benefits for tax positions taken with respect to 2015 and prior years will significantly change in 2016.

A reconciliation of the unrecognized tax benefits for the year 2015 is as follows (dollars in thousands):

Balance at January 1, 2015	$	30,195
Additions for tax positions related to the current year		—
Additions for tax positions related to prior years		50
Reductions for tax positions related to prior years		(9	)
Balance at December 31, 2015	$	30,236

On September 13, 2013, Treasury and the Internal Revenue Service issued final regulations regarding the deduction and capitalization of expenditures related to tangible property. The final regulations under Internal Revenue Code Sections 162, 167 and 263(a) apply to amounts paid to acquire, produce, or improve tangible property as well as dispositions of such property and are generally effective for tax years beginning on or after January 1, 2015. The Company has evaluated these regulations and determined they will not have a material impact on the Company's consolidated results of operations, cash flows or financial position.