INCOME TAXES

The Company is included in Scripps' consolidated federal tax return and in unitary returns in certain states for periods prior to April 1, 2015. The Company also files separate state returns for its Memphis and Evansville newspapers. For periods ending on or before April 1, 2015, the Company accounts for income taxes under the separate return basis. Under this approach, the Company determines its current tax liability and its deferred tax assets and liabilities as if it were filing a separate tax return. Current tax is considered paid as incurred and settled through parent company equity. Effective April 1, 2015 the Company will no longer be included in the Scripps federal return, but will instead file its own federal return and all applicable unitary and separate state returns, as well as contining to file separate state returns for its Memphis and Evansville newspapers.

The provision for income taxes consisted of the following:



	For the years ended December 31,
	2015		2014		2013
Current:
Federal	$	1,974	$	—	$	—
State and local	718		413		409
Total current income tax provision	2,692		413		409
Deferred:
Federal	2,611		—		(2,115		)
Other	418		—		(364		)
Total deferred income tax provision	3,029		—		(2,479		)
Provision (benefit) for income taxes	$	5,721	$	413	$	(2,070	)

Prior to April 1, 2015, Scripps Newspapers recorded minimal state taxes and a valuation allowance against its net deferred tax assets for federal and certain state income taxes as it was more likely than not that it would not realize these benefits as a result of its history of losses over the past three years. We have treated the Scripps Newspapers loss in the first quarter of 2015 as a non-deductible permanent difference because, for tax purposes, the loss will be claimed by Scripps, not Journal Media Group. In accordance with the intraperiod tax allocation rules, in 2013, we allocated $2,303 of tax benefit to other comprehensive income and treated the corresponding offset as an allocation to tax benefit from operations.

For the remainder of 2015, we have recorded a valuation allowance against certain of our net deferred tax assets primarily attributable to state net operating loss carryovers. As a result of the negative evidence presented by our history of losses over the past three years, we have concluded that it is more likely than not that we will not realize these benefits.

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:



	For the years ended December 31,
	2015		2014		2013
Statutory rate	35.0	%	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal income tax benefit	9.2		(1.1	)	0.6
Non deductible expenses	21.3		(1.4	)	(2.2	)
Tax credits	—		0.4		0.5
Other	(1.1	)	1.2		0.1
Valuation allowance	1.0		(35.7	)	(22.9	)
Effective income tax rate	65.4	%	(1.6	)%	11.1	%

For 2015 the non deductible expenses are primarily composed of the first quarter pre-tax loss from Scripps Newspapers and transaction costs, both of which are not deductible by the Company for tax purposes.

The approximate effect of the temporary differences giving rise to deferred income tax assets (liabilities) were as follows:



	As of December 31,
	2015			2014
Temporary differences:
Property, plant and equipment	$	(25,999	)	$	(26,051	)
Goodwill and other intangible assets	896			1,517
Accrued expenses not deductible until paid	595			4,512
Deferred compensation and retiree benefits not deductible until paid	5,039			5,257
Other temporary differences, net	1,291			1,626
Total temporary differences	(18,178		)	(13,139		)
Federal and state net operating loss carryforwards	2,963			68,758
Valuation allowances	(1,738		)	(55,619		)
Net deferred tax liability	$	(16,953	)	$	—

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers all available positive and negative evidence, including the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical pre-tax losses, GAAP prevents the Company from using projections for future taxable income to support the realization of its deferred tax assets. Accordingly, management believes it is more likely than not that the Company will not realize the benefit of most of its net deferred tax assets. As of December 31, 2015 and 2014, in jurisdictions in which there is a net deferred tax asset, the Company has established a full valuation allowance.

As of April 1, 2015, state net operating losses for our Memphis and Evansville subsidiaries of $44,202 were transferred to the Company. These losses will expire at various times through 2035. As of April 1, 2015, a federal net operating loss of $5,422 generated by Scripps prior to April 1, 2015 and allocable to the Memphis and Evansville subsidiaries was transferred to the Company. This loss will be fully utilized on our 2015 federal income tax return.

The Company files tax returns in the United States federal jurisdiction, as well as in approximately 18 state and local jurisdictions. The statute of limitations for assessing additional taxes is three years for federal purposes and typically between three and four years for state and local purposes. As a newly formed public company which began filing federal tax returns in 2014, the Company's 2014-2015 tax returns are open for federal purposes. For state purposes, our 2011-2015 separate company state tax returns for the Evansville and Memphis entities remain open, unless the statute of limitations has been previously extended. Currently, Journal Communications is under audit by the IRS for the 2013 tax year. Under the terms of the Tax Matters Agreement signed with Scripps, we are only liable for any tax assessment which is allocable to the newspaper business. In addition, we are under audit in Mississippi for our 2010-2012 tax returns.

As of December 31, 2015, our liability for unrecognized tax benefits was $17, which, if recognized, would have an impact on our effective tax rate. As of December 31, 2015, it is reasonably possible for $32 of unrecognized tax benefits and related interest to be recognized within the next 12 months due to settlements with taxing authorities.

We recognize interest income, interest expense and penalties related to unrecognized tax benefits in our provision for income taxes. As of December 31, 2015 and December 31, 2014, we had $15 and $0, respectively, accrued for interest expense and penalties. During 2015 and 2014, we recognized $15 and $0, respectively, related to unrecognized tax benefits.