Income Taxes

The provision for income taxes is comprised of the following:



	Years Ended December 31,
	2016			2015			2014
	(In thousands)
Current
Federal	$	(71,878	)	$	480,446		$	294,509
State	(7,304		)	71,750			40,325
Deferred
Federal	100,208			(127,714		)	(168,756		)
State	(1,615		)	(18,422		)	(24,906		)
	$	19,411		$	406,060		$	141,172

The statutory federal income tax rate applied to pre-tax book income reconciles to income tax expense as follows:



	Years Ended December 31,
	2016			2015			2014
	(In thousands)
Tax computed at statutory rate	$	(60,037	)	$	422,999		$	163,625
State income taxes, net of federal tax benefit	(14,056		)	40,385			13,641
Domestic production activities deduction	4,170			(35,200		)	(20,998		)
Noncontrolling interest in net income	(26,903		)	(24,155		)	(17,431		)
Goodwill	119,722			—			—
Other	(3,485		)	2,031			2,335
	$	19,411		$	406,060		$	141,172

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our deferred income tax assets and liabilities as of December 31, 2016 and 2015 are as follows:



	December 31, 2016
	Assets		Liabilities			Total
	(In thousands)
Deferred income taxes
Properties, plants and equipment (due primarily to tax in excess of book depreciation)	$	—	$	(618,053	)	$	(618,053	)
Accrued employee benefits	21,355		—			21,355
Accrued post-retirement benefits	10,024		—			10,024
Accrued environmental costs	41,152		—			41,152
Hedging instruments	7,396		—			7,396
Inventory differences	—		(8,341		)	(8,341		)
Deferred turnaround costs	—		(83,993		)	(83,993		)
Net operating loss and tax credit carryforwards	23,203		—			23,203
Investment in HEP	—		(27,276		)	(27,276		)
Other	14,119		—			14,119
Total	$	117,249	$	(737,663	)	$	(620,414	)



	December 31, 2015
	Assets		Liabilities			Total
	(In thousands)
Deferred income taxes
Properties, plants and equipment (due primarily to tax in excess of book depreciation)	$	—	$	(648,542	)	$	(648,542	)
Accrued employee benefits	22,355		—			22,355
Accrued post-retirement benefits	11,518		—			11,518
Accrued environmental costs	42,517		—			42,517
Hedging instruments	21,815		—			21,815
Inventory differences	175,614		—			175,614
Deferred turnaround costs	—		(104,944		)	(104,944		)
Net operating loss and tax credit carryforwards	8,033		—			8,033
Investment in HEP	—		(23,429		)	(23,429		)
Other	—		(2,843		)	(2,843		)
Total	$	281,852	$	(779,758	)	$	(497,906	)

At December 31, 2016, we had a U.S. federal income tax net operating loss of $199.0 million that is scheduled to be carried back to 2014. As a result of this net operating loss, we expect to pay alternative minimum tax for 2016 and to generate a deferred credit. We generated a $11.0 million state operating loss, which can be carried back in some states, but is generally carried forward for 5 to 20 years. We also generated an Oklahoma income tax credit of $3.0 million that can be carried forward indefinitely, and a Kansas income tax credit that can be carried forward for 16 tax years.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	Years Ended December 31,
	2016		2015		2014
			(In thousands)
Balance at January 1	$	—	$	—	$	9,006
Additions based on tax positions related to the current year	22,137		—		—
Settlements	—		—		(9,006		)
Balance at December 31	$	22,137	$	—	$	—

At December 31, 2016 there were $22.1 million of unrecognized tax benefits that, if recognized, would affect our effective tax rate. We had no unrecognized benefits at December 31, 2015 or 2014. Unrecognized tax benefits are adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.

The 2016 addition to unrecognized tax benefits relates to claims filed with the IRS on the federal income tax treatment of refundable biodiesel/ethanol blending tax credits for certain prior years. The issues related to the claims are complex and uncertain, and we cannot conclude that it is more likely than not that we will sustain the claims. Therefore, no tax benefit has been recognized for the filed claims. The Company believes it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase within 12 months of the reporting date based on additional filings.

We recognize interest and penalties relating to liabilities for unrecognized tax benefits as an element of tax expense. We have not recorded any penalties related to our uncertain tax positions as we believe that it is more likely than not that there will not be any assessment of penalties.

We are subject to U.S. federal income tax, Oklahoma, Kansas, New Mexico, Iowa, Arizona, Utah, Colorado and Nebraska income tax and to income tax of multiple other state jurisdictions. We have substantially concluded all state and local income tax matters for tax years through 2011. Other than the federal claim noted above, we have materially concluded all U.S. federal income tax matters for tax years through December 31, 2013.