Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of the Income Tax Provision Allocated to Continuing Operations

As a REIT, we generally are not subject to federal and state corporate income taxes on income of the REIT that we distribute to our shareholders. We are, however, subject to corporate taxes on built-in gains (the excess of fair market value over tax basis on January 1, 2006) on sales of real property held by the REIT during the first ten years following the REIT conversion. The sale of standing timber is not subject to built-in gains tax. The Small Business Jobs Act of 2010 modified the built-in gains provisions to exempt sales of real properties in 2011, if five years of the recognition period had elapsed before January 1, 2011. The American Taxpayer Relief Act of 2012 extended the reduced five-year holding period for sales occurring in 2012 and 2013. Accordingly, the built-in gains tax does not apply to sales of real property that occurred in 2011, 2012 and 2013.

We conduct certain activities through taxable REIT subsidiaries (TRS), which are subject to corporate-level federal and state income taxes. These activities are principally comprised of our wood products manufacturing operations and certain real estate investments held for development and resale.

We reflect accrued interest related to tax obligations, as well as penalties, in our provision for income taxes. For the years ended December 31, 2013, 2012 and 2011, we recognized insignificant amounts related to interest and penalties in our tax provision. At December 31, 2013 and 2012, we had no accrued interest related to tax obligations and insignificant accrued interest receivable with respect to open tax refunds.

The income tax provision consists of the following for the years ended December 31:



(Dollars in thousands)	2013			2012		2011
Current	$	16,352		$	292	$	(73	)
Deferred	(2,754		)	8,197		4,990
Net operating loss carryforwards	287			8,320		(772		)
Income tax provision	$	13,885		$	16,809	$	4,145

Schedule of Effective Income Tax Rate Reconciliation

The income tax provision differs from the amount computed by applying the statutory federal income tax rate of 35% to income before income taxes due to the following for the years ended December 31:



(Dollars in thousands)	2013			2012			2011
U.S. federal statutory income tax	$	29,563		$	20,791		$	15,544
REIT income not subject to federal income tax	(13,918		)	(5,241		)	(11,739		)
Change in valuation allowance	(683		)	—			897
State income taxes, net of federal income tax	942			1,615			54
Domestic production activities deduction	(1,579		)	—			—
All other items	(440		)	(356		)	(611		)
Income tax provision	$	13,885		$	16,809		$	4,145
Effective tax rate	16.4		%	28.3		%	9.3		%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of significant temporary differences creating deferred tax assets and liabilities at December 31 were:



(Dollars in thousands)	2013			2012
Deferred tax assets:
Pensions	$	16,807		$	38,986
Postretirement employee benefits	18,464			20,293
Nondeductible accruals	2,405			3,841
Inventories	2,636			3,126
Incentive compensation	2,807			2,843
Tax credits	2,135			2,678
Employee benefits	1,586			1,795
Net operating loss carryforwards	1,056			1,346
Other	200			124
Total deferred tax assets	48,096			75,032
Valuation allowance	(2,184		)	(2,867		)
Deferred tax assets, net of valuation allowance	45,912			72,165
Deferred tax liabilities:
Timber and timberlands	(5,871		)	(6,006		)
Property, plant and equipment	(10,741		)	(12,360		)
Total deferred tax liabilities	(16,612		)	(18,366		)
Net deferred tax assets	$	29,300		$	53,799

Net deferred tax assets and liabilities consist of:



(Dollars in thousands)	2013		2012
Current deferred tax assets	$	7,724	$	10,507
Noncurrent deferred tax assets	21,576		43,292
Net deferred tax assets	$	29,300	$	53,799

Summary of Tax Years Subject to Examination by Major Taxing Jurisdictions

The following table summarizes the tax years subject to examination by major taxing jurisdictions:



Jurisdiction	Years
Federal	2008	-	2013
Arkansas	2010	-	2013
Michigan	2009	-	2013
Minnesota	2009	-	2013
Idaho	2010	-	2013