Income Taxes

Significant components of the provision for income taxes from continuing operations are as follows:



	Year Ended December 31,
	2014			2013		2012
	(in thousands)
Current:
Federal	$	85,966		$	86,437	$	32,656
State and local	5,389			6,595		3,250
Foreign	2,057			413		963
Total current expense	93,412			93,445		36,869
Deferred:
Federal	34,240			11,658		27,870
State and local	(122		)	389		1,385
Total deferred expense (benefit)	34,118			12,047		29,255
Total income tax expense (benefit)	$	127,530		$	105,492	$	66,124

The income tax provision differs from that computed at the federal statutory corporate tax rate as follows:



	Year Ended December 31,
	2014		2013		2012
Expected provision at federal statutory tax rate	35.0	%	35.0	%	35.0	%
State tax expense, net of federal benefit	1.0	%	1.7	%	2.1	%
Income tax credits	(0.4	)%	—	%	(0.1	)%
Other	0.5	%	0.7	%	0.9	%
Total income tax expense (benefit)	36.1	%	37.4	%	37.9	%

The Company accounts for income taxes using the asset and liability method. Deferred taxes are recorded based on differences between the financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. At December 31, 2014 and 2013, the significant components of the Company's deferred taxes consisted of the following:



	December 31,
	2014			2013
	(in thousands)
Deferred tax assets:
Net operating loss	$	252		$	188
Accrued rent	—			1,872
Deferred revenue	410			6,241
Nondeductible accruals	12,239			6,702
Deferred manufacturing credits	848			3,309
Unrealized gains/losses on derivatives	1,865			—
Accrued maintenance	3,073			1,225
Equity compensation	4,514			2,687
Other	661			16
Deferred tax assets	23,862			22,240
Deferred tax liabilities:
Capitalized interest	568			736
Deferred gain and losses on leases, net	2,349			1,882
Accrued rent	2,560			—
Prepaid expenses	1,681			—
Property, plant and equipment	37,369			6,384
Accrued engine maintenance	45,702			45,911
Deferred tax liabilities	90,229			54,913
Net deferred tax assets (liabilities)	$	(66,367	)	$	(32,673	)
Deferred taxes included within:
Assets:
Current deferred tax assets, net	$	9,643		$	16,243
Liabilities:
Noncurrent deferred tax liabilities, net	$	76,010		$	48,916

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating the Company’s ability to utilize its deferred tax assets, it considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction by jurisdiction basis. Management does not believe that the realization of deferred tax assets is in jeopardy and thus a valuation allowance for 2014 will not be necessary.

The Company has fully utilized its federal NOL carryforwards and AMT credit carryforwards as of December 31, 2012. At December 31, 2014, the Company has state net operating loss carryforwards of approximately $2.7 million which can be used to offset future state taxable income. State net operating losses begin to expire in 2017.

Excess tax benefits are only recognized in the financial statements upon actual realization of the related tax benefit which occurred in 2012 upon utilization of the remaining NOLs and AMT credit carryforwards during the year. During 2014, the Company recognized a windfall tax benefit of $1.9 million which was recorded as a reduction to income tax payable and a corresponding entry to additional paid in capital.

The Company recorded a current foreign tax credit of $1.2 million against its 2014 federal income tax liability which was fully utilized during the year. During 2014, the Company amended its 2005 through 2012 U.S. federal income tax returns to credit foreign taxes of $1.4 million against U.S. income taxes previously paid.

The Company filed an advance consent change in tax accounting method for its lease payments on certain leased aircraft, effective for its 2014 tax year. The estimated tax impact of this tax accounting method change reduces income tax payable in the amount of $35 million, with a corresponding increase in noncurrent deferred tax liability. The Company has yet to receive advance consent for this tax accounting method change and, therefore, has not included the tax impact in the balance sheet as of December 31, 2014.

On September 13, 2013, the United States Treasury and Internal Revenue Service issued final tangible personal property regulations that broadly apply to amounts paid to acquire, produce or improve tangible property, as well as dispositions of such property. In review of these regulations, the Company has concluded that there is no material impact on its financial position, results of operations or cash flows.

The Company's policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of selling, general and administrative expenses. For tax years ended December 31, 2014, 2013 and 2012, the Company did not recognize any liabilities for uncertain tax positions nor any interest and penalties on unrecognized tax benefits.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company's tax years from 2006 through 2013 are still subject to examination for federal income tax purposes, due to net operating loss carryovers generated in such years. Various state and foreign jurisdiction tax years remain open to examination. The Company is currently under audit with various state jurisdictions. The Company believes that any potential assessment would be immaterial to its financial statements.