Income Taxes

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



	Year Ended December 31,
	2015		2014			2013
	(in thousands)
Current:
Federal	$	21,632	$	85,966		$	86,437
State and local	6,702		5,389			6,595
Foreign	1,235		2,057			413
Total current expense	29,569		93,412			93,445
Deferred:
Federal	149,583		34,240			11,658
State and local	6,031		(122		)	389
Total deferred expense (benefit)	155,614		34,118			12,047
Total income tax expense (benefit)	$	185,183	$	127,530		$	105,492

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



	Year Ended December 31,
	2015		2014		2013
Expected provision at federal statutory tax rate	35.0	%	35.0	%	35.0	%
State tax expense, net of federal benefit	1.7	%	1.0	%	1.7	%
Income tax credits	—	%	(0.4	)%	—	%
Other	0.2	%	0.5	%	0.7	%
Total income tax expense (benefit)	36.9	%	36.1	%	37.4	%

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, 2015 and 2014, the significant components of the Company's deferred taxes consisted of the following:



	December 31,
	2015			2014
	(in thousands)
Deferred tax assets:
Net operating loss	$	—		$	252
Deferred revenue	3,381			410
Nondeductible accruals	11,056			12,239
Deferred manufacturing credits	822			848
Unrealized (gain) loss on derivatives, net	—			1,865
Accrued maintenance	830			3,073
Equity compensation	4,485			4,514
Other	2,751			661
Deferred tax assets	23,325			23,862
Deferred tax liabilities:
Capitalized interest	286			568
Deferred gain (loss) on leases, net	2,393			2,349
Accrued rent	6,724			2,560
Prepaid expenses	2,151			1,681
Property, plant and equipment	168,813			37,369
Accrued aircraft and engine maintenance	64,439			45,702
Deferred tax liabilities	244,806			90,229
Net deferred tax assets (liabilities)	$	(221,481	)	$	(66,367	)

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 2015 has not been recorded. Management will continue to monitor the status of Spirit’s operations and reassess the need for a valuation allowance on a quarterly basis.

The Company has fully utilized its federal and state NOL carryforwards and AMT credit carryforwards as of December 31, 2015.

In accordance with ASC 718, excess tax benefits are only recognized in the financial statements upon actual realization of the related tax benefit. The Company recognized a windfall tax benefit of $8.9 million and $1.9 million for tax years ended December 31, 2015 and 2014, respectively. The windfall tax benefit was recorded as a reduction to income tax payable and a corresponding entry to additional paid in capital.

In December 2015, bonus depreciation was extended with the passage of the Protecting Americans from Tax Hikes Act (the Act). The Company made estimated payments during 2015 excluding the impact of a potential extension of bonus depreciation. The passage of the Act allowed the Company to claim bonus depreciation deductions in 2015 on all bonus eligible acquisitions, including purchased aircraft. These deductions resulted in an overpayment of current year federal income taxes of $72.3 million as of December 31, 2015 which is recorded as a component of current assets on the balance sheet.

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, 2015, 2014 and 2013, 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 federal income tax returns for 2006 through 2014 tax years are still subject to examination in the U.S. Various state and foreign jurisdiction tax years remain open to examination. The Company believes that any potential assessment would be immaterial to its financial statements.