10. Income Taxes

The components of the income tax expense (benefit) are as follows (dollars in thousands):

	For the Year Ended December 31,
	2014			2013			2012
Current
Federal	$	—		$	—		$	—
State and local		(941	)		(835	)		(535	)

		(941	)		(835	)		(535	)

Deferred
Federal		6,081			8,346			(78,978	)
State and local		770			1,271			(11,849	)

		6,851			9,617			(90,827	)

Total income tax expense (benefit)	$	5,910		$	8,782		$	(91,362	)

The income tax expense (benefit) differs from the amounts determined by applying the statutory federal income tax rate of 34% to the income before income taxes for the following reasons (dollars in thousands):

	For the Year Ended December 31,
	2014			2013			2012
Income tax at federal rate	$	4,763		$	6,552		$	6,331
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit		592			814			774
Permanent difference for compensation limitation		595			575			271
Expense reflected in tax basis		415			—			—
Tax credit included in taxable income		327			320			204
Other permanent differences		47			931			26
Capital goods excise tax credit		(942	)		(836	)		(535	)
Other, net		51			6			—
Change in valuation allowance		62			420			(98,433	)

Total income tax expense (benefit)	$	5,910		$	8,782		$	(91,362	)

During the years ended December 31, 2013 and 2012, the other permanent difference was attributed primarily to the Company recognizing adjustments to certain tax attributes for income tax purposes.

Deferred income taxes consisted of the following (dollars in thousands):

	December 31,
	2014			2013
Deferred tax liabilities:
Property and equipment	$	46,618		$	37,319
Other basis differences		577			582

		47,195			37,901

Deferred tax assets:
Net operating loss and credit carryforwards		43,497			25,730
Intangible assets		52,022			62,626
Expenses deferred for tax		6,138			7,278
Employee benefits		30,029			21,654
Other basis differences		4,457			4,453

		136,143			121,741
Valuation allowance		(482	)		(420	)

		135,661			121,321

Deferred tax asset, net	$	88,466		$	83,420

As of December 31, 2014, net operating losses available for carry forward through 2034 amounted to $105.9 million for federal purposes and $113.1 million for state purposes. Availability of net operating losses in future periods may be subject to additional limitations if there is a deemed change in control for income tax reporting purposes. Such change in control will be determined for income tax reporting purposes based on future changes in stock ownership. In addition to the net operating losses disclosed previously, there was $1.6 million and $0.4 million of excess tax deductions available at December 31, 2014 and 2013, respectively, related to employee stock expense for which a benefit will be recorded to additional paid-in capital when realized.

Prior to December 31, 2012, the Company maintained a full valuation allowance over its net deferred income tax assets. This situation resulted from the Company having a short history as a new entity (post Chapter 11). As a result of its continued positive earnings, as well as positive forecasted earnings in the future, management concluded that it was more likely than not that the Company would realize its deferred income tax assets, and therefore, the Company released its valuation allowance as of December 31, 2012. For the years ended December 31, 2014 and 2013, the Company recognized a valuation allowance for $0.1 and $0.4 million, respectively, for charitable loss carry forwards subject to deduction limitations. If there is a decline in the level of actual future or forecasted earnings, the conclusion regarding the need for a valuation allowance may change in future periods resulting in the establishment of a valuation allowance for some or all of the deferred income tax assets. The following is a summary of activity for the valuation allowance (dollars in thousands):

	Beginning Balance		Charge (Credit) to Income Tax Expense or Equity			Ending Balance
January 1 to December 31, 2014	$	420	$	62		$	482
January 1 to December 31, 2013		—		420			420
January 1 to December 31, 2012		120,336		(120,336	)		—

The Company evaluates its tax positions for liability recognition. As of December 31, 2014, the Company had no unrecognized tax benefit. No interest or penalties related to tax assessments were recognized in the Company's consolidated statements of income for the years ended December 31, 2014, 2013 or 2012. All tax years from 2011 remain open for both federal and Hawaii state purposes.