The following table summarizes tax agreement liability activity during the years ended December 31 (in thousands):

	2012			2011			2010

Beginning balance	$	170,636		$	190,111		$	54,509
Changes for the three months ended June 30		—			42,733			—
Changes for the three months ended September 30		(29,000	)		(52,799	)		13,731
Changes for the three months ended December 31		—			—			123,556
Payments made		(25,098	)		(9,409	)		(1,685	)

Ending balance		116,538			170,636			190,110
Less current portion		19,485			19,113			18,226

Long-term tax agreement liability	$	97,053		$	151,523		$	171,885

Periodically, CPE Inc. adjusts the tax agreement liability to reflect an updated forecast of future taxable income and these adjustments, which could be significant, are reflected in CPE Inc.'s operating results. The estimated liability is based on forecasts of future taxable income over the anticipated life of the mining operations and reclamation activities, assuming no additional coal reserves are acquired.

During the three months ended December 31, 2010, CPE Inc. completed the Secondary Offering. This transaction increased the amount CPE Inc. expected to owe under the Tax Receivable Agreement and the net impact of the adjustment was recognized in equity.

During the three months ended September 30, 2011 and 2010, CPE Inc. completed its final determinations of its increased tax basis in CPE Resources's assets recorded as a result of the Secondary Offering and IPO transactions, respectively. These final determinations each reduced the amount CPE Inc. expected to owe on the tax agreement liability and the net impact of these adjustments was recognized in equity. The decrease in 2010 was more than offset by the increase from the operating plan update noted below. In addition, during the three months ended June 30, 2011, the successful bids for the WAII North and WAII South Coal Tracts were considered triggering events for updating our estimates of the tax agreement liability. This resulted in an increase in the estimated future liability and a charge to non-operating income.

During each of the three months ended September 30, 2012, 2011, and 2010, CPE Inc. completed updates of its most recent operating plans, inclusive of market and cash cost forecasts, and calculation of the resulting amount and timing of estimated future taxable income. The updates to the operating plans in 2012 and 2011 indicated the future tax value expected to be received declined; therefore, there was a decrease in the liability due to Rio Tinto resulting in a benefit to non-operating income for the years ended December 31, 2012 and 2011. For the year ended December 31, 2010, the future tax value expected to be received increased, resulting in an increase in the estimated liability and a charge to non-operating income. Related adjustments to the net value of deferred tax assets are recorded through income tax expense.

The coal acquired as part of the Youngs Creek project, as discussed in Note 4, is not classified as proven and probable reserves at December 31, 2012; therefore, no adjustment was made to the tax agreement liability for this coal asset acquisition as we are unable to make a reasonable estimate of the expected additional taxable income resulting from the development of these assets until definitive mine plans are sufficiently advanced. The tax agreement liability will be adjusted in the period when sufficient certainty is achieved for Youngs Creek project coal classification as proven and probable reserves.

The assumptions used in CPE Inc.'s forecasts are subject to substantial uncertainty about future business operations and the actual amount and timing of payments that are required to be made on the tax agreement liability could differ materially from our estimates. Based on our estimates as of December 31, 2012, CPE Inc. is expected to make payments of $19.5 million in 2013 and payments averaging approximately $12.6 million each year during 2014 to 2017 and additional payments in subsequent years. CPE Inc.'s payments under this agreement would be greater if CPE Resources generates taxable income significantly in excess of its current estimated future taxable income over the anticipated life of its mines, for example, because CPE Resources acquires additional coal reserves beyond its existing coal reserves and, as a result, CPE Inc. realizes the full tax benefit of such increased tax bases (or an increased portion thereof). Required payments under this agreement may increase or become accelerated as a result of a change in control of CPE Resources, or a default by CPE Inc.