Income Taxes

The composition of our income tax (expense) benefit from continuing operations for the years ended December 31, 2013, 2012 and 2011 was as follows:



	Current			Deferred			Total
	(in millions)
Year ended December 31, 2013:
U.S. Federal	$	—		$	53.8		$	53.8
State	(3.3		)	4.6			1.3
	$	(3.3	)	$	58.4		$	55.1
Year ended December 31, 2012:
U.S. Federal	$	—		$	(0.9	)	$	(0.9	)
State	(4.0		)	0.1			(3.9		)
	$	(4.0	)	$	(0.8	)	$	(4.8	)
Year ended December 31, 2011:
U.S. Federal	$	—		$	1.4		$	1.4
State	(3.4		)	(0.3		)	(3.7		)
	$	(3.4	)	$	1.1		$	(2.3	)

The following table reconciles our effective income tax rate from continuing operations to the federal statutory tax rate of 35%:



	2013					2012					2011
	Percent		Amount			Percent		Amount			Percent		Amount
	(dollars in millions)
Federal income tax (expense) benefit at the statutory rate	35.0	%	$	66.0		35.0	%	$	3.0		(35.0	)%	$	(10.9	)
State income taxes, net of federal tax benefits	3.4	%	6.5			(52.5	)%	(4.4		)	(15.0	)%	(4.7		)
Non-deductible expenses and other	(0.9	)%	(1.8		)	(8.1	)%	(0.7		)	(2.2	)%	(0.7		)
Cancellation of stock options	—	%	—			(24.5	)%	(2.1		)	(3.9	)%	(1.2		)
Non-deductible donation of land	—	%	—			—	%	—			(3.7	)%	(1.1		)
Acquisition costs	(5.4	)%	(10.2		)	—	%	—			—	%	—
Reserves for unrecognized tax benefits	(0.1	)%	(0.2		)	(1.4	)%	(0.1		)	1.7	%	0.5
Credits	0.8	%	1.6			6.2	%	0.4			3.0	%	0.9
Change in valuation allowance/reserve of deferred tax assets	(3.6	)%	(6.8		)	(10.9	)%	(0.9		)	47.8	%	14.9
Income tax (expense) benefit from continuing operations	29.2	%	$	55.1		(56.2	)%	$	(4.8	)	(7.3	)%	$	(2.3	)

The following table shows the allocation of income tax (expense) benefit between continuing operations, discontinued operations and equity:



	For the year ended December 31,
	2013			2012			2011
	(in millions)
Income (loss) from continuing operations before income taxes	$	(188.5	)	$	(8.4	)	$	31.2
Income tax (expense) benefit allocated to continuing operations	55.1			(4.8		)	(2.3		)
Income (loss) from continuing operations	(133.4		)	(13.2		)	28.9
Loss from discontinued operations before income taxes	(123.8		)	(18.9		)	(31.6		)
Income tax (expense) benefit allocated to discontinued operations	1.2			0.3			0.2
Loss from discontinued operations	(122.6		)	(18.6		)	(31.4		)
Net loss	$	(255.9	)	$	(31.8	)	$	(2.5	)
Income tax (expense) benefit allocated to other comprehensive income	$	—		$	—		$	0.2

At December 31, 2013 and 2012, the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were:



	December 31,
	2013			2012
	(in millions)
Deferred tax assets—current:
Workers’ compensation insurance reserve	$	4.3		$	2.7
Allowance for doubtful accounts	2.8			3.1
Legal and merger costs	4.8			3.6
Accruals, reserves and other	29.2			7.7
Less valuation allowance	(22.5		)	(16.4		)
Total deferred tax assets—current	18.6			0.7
Deferred tax liabilities—current:
Prepaid expenses	(7.0		)	(3.9		)
Accruals, reserves and other	(3.9		)	—
Total deferred tax liabilities—current	(10.9		)	(3.9		)
Net current deferred tax asset (liabilities)	$	7.7		$	(3.2	)
Deferred tax assets—non-current:
Federal tax credit carry-forwards	$	31.2		$	28.9
Federal net operating loss carry-forwards	188.1			91.4
State net operating loss carry-forwards	29.6			9.8
Capital loss carry-forwards	5.9			6.3
Deferred compensation	2.6			2.6
Pre-opening expenses capitalized for tax purposes	10.8			11.6
ACDL investment write-down	38.5			9.1
Share-based compensation expense—book cost	8.8			11.9
Bond payable	27.7			—
Accruals, reserves and other	42.0			18.6
Less valuation allowance	(237.7		)	(184.7		)
Total deferred tax assets—non-current	147.5			5.5
Deferred tax liabilities—non-current:
Land, buildings, vessels and equipment, net	(187.2		)	(2.9		)
Intangible assets	(126.8		)	(6.1		)
Total deferred tax liabilities—non-current	(314.0		)	(9.0		)
Net non-current deferred tax liabilities	$	(166.5	)	$	(3.5	)

The following table summarizes the total deferred tax assets and total deferred tax liabilities provided in the previous table:



	December 31,
	2013			2012
	(in millions)
Total deferred tax assets	$	426.3		$	207.3
Less valuation allowances	(260.2		)	(201.1		)
Less total deferred tax liabilities	(324.9		)	(12.9		)
Net deferred tax liabilities	$	(158.8	)	$	(6.7	)

In 2013, we recorded a tax benefit from the release of $58.4 million of our valuation allowance as a result of the consolidation of our deferred tax assets with the Ameristar deferred tax liability. As of December 31, 2013, we continue to provide a full valuation allowance against deferred tax assets for all jurisdictions except for certain states that are more likely than not to be realized. In evaluating the need for a valuation allowance, we consider all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, forecasts of future taxable income, and tax planning strategies. We have a cumulative U.S. pretax accounting loss for the years 2011 through 2013. Considering all available evidence both positive and negative, and in light of the cumulative losses in recent years, we determined that a full valuation allowance was appropriate.

As of December 31, 2013, our tax filings reflected available Alternative Minimum Tax (“AMT”) credit carry-forwards of $3.1 million, General Business Credit (“GBC”) carry-forwards of $17.7 million and Foreign Tax Credit (“FTC”) carry-forwards of $10.4 million. The FTC and GBC carry-forwards will begin to expire in 2020 through 2033, while the AMT credits can be carried forward indefinitely to reduce future regular tax liabilities. As of December 31, 2013, we had $553 million of federal net operating losses, which can be carried forward 20 years and will begin to expire in 2028. We also have $862 million of state net operating loss carry-forwards, predominantly in Louisiana and Missouri, that expire on various dates beginning in 2014. Our net operating loss carry-forwards include a $14.2 million excess tax benefit from stock option deductions, which have not been recognized for financial statement purposes. The excess tax benefit will be credited to additional paid-in capital when the net operating loss is utilized and reduces current-year income tax payable.

We file income tax returns in federal and state jurisdictions and are no longer subject to federal income tax examinations for tax years prior to 2011 and state income tax examinations for tax years prior to 2000. In 2012, our federal tax return was examined by the Internal Revenue Service for tax years 2009 and 2010. The examination concluded in January 2013 with adjustments to certain timing items that resulted in an immaterial impact on our 2012 income tax expense. In 2008, the Indiana Department of Revenue commenced an income tax examination of the Company's Indiana income tax filings for the 2005 to 2007 period. More recently in April 2012, we received a supplemental letter of findings from the Indiana Department of Revenue upholding the prior audit assessment on our Indiana income tax filings for the years 2005, 2006, and 2007. We filed an appeal in June 2012 with the Indiana Tax Court to set aside the entire audit assessment. Our appeal is currently pending Court review. For further discussion, see Note 11, Commitments and Contingencies.

As of December 31, 2013, we had $13.5 million of uncertain tax benefits that, if recognized, would impact the effective tax rate. Authoritative guidance requires companies to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws. We recognize accrued interest and penalties related to uncertain tax benefits as a component of income tax expense. During 2013, we accrued approximately $0.2 million of interest related to unrecognized tax benefits. We had $1.6 million of cumulative interest accrued as of the end of the year. No penalties were accrued for in any years.

The following table summarizes the activity related to uncertain tax benefits for 2013 and 2012, excluding any interest or penalties:



	2013			2012
	(in millions)
Balance as of January 1	$	9.4		$	7.7
Gross increases - tax positions in prior periods	—			1.5
Gross increases - tax positions in current period	3.5			0.2
Gross decreases - tax positions in current period	(0.9		)	—
Acquisition	23.8			—
Statute of limitation expirations	(0.1		)	—
Balance as of December 31	$	35.7		$	9.4