Income Taxes

Income tax expense consisted of the following:



	Year Ended December 31,
(dollars in millions)	2014			2013			2012
Current:
Federal	$	8.0		$	—		$	1.8
State and local	1.6			—			1.6
Total current	9.6			—			3.4
Investment tax credits	(0.2		)	(0.2		)	(0.3		)
Deferred:
Federal	48.4			(13.0		)	21.8
State and local	0.7			(3.7		)	2.0
Foreign	—			0.3			(0.5		)
Total deferred	49.1			(16.4		)	23.3
Valuation allowance	(1.1		)	14.1			(1.7		)
Total	$	57.4		$	(2.5	)	$	24.7

The following is a reconciliation of the statutory federal income tax rate with the effective tax rate for each year:



	Year Ended December 31,
	2014		2013		2012
U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal income tax	0.4		1.5		3.9
Change in valuation allowance, net of federal income tax	(3.0	)	(15.8	)	(2.3	)
State net operating loss adjustments	2.9		2.7		3.7
Nondeductible interest expense	4.0		(11.4	)	18.1
Unrecognized tax benefit changes	2.1		(2.1	)	2.2
Nondeductible compensation	1.0		(2.5	)	2.7
Foreign	—		(0.7	)	3.5
Other differences, net	0.8		(2.3	)	2.0
Effective tax rate	43.2	%	4.4	%	68.8	%

The income tax (benefit) provision was charged to continuing operations, accumulated other comprehensive income or additional paid-in capital as follows:



	Year Ended December 31,
(dollars in millions)	2014			2013			2012
Income tax (benefit) provision related to:
Continuing operations	$	57.4		$	(2.5	)	$	24.7
Accumulated other comprehensive (loss) income	(22.4		)	42.1			(0.4		)
Excess tax benefits on stock option exercises	(0.1		)	(0.5		)	(2.4		)

The components of our deferred tax assets and liabilities were as follows:



	December 31,
(dollars in millions)	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	286.5		$	452.3
Pension and postretirement benefits	95.5			81.9
Equity method investment in CyrusOne	64.5			41.5
Deferred gain on sale of wireless spectrum licenses	42.2			—
AMT Credit Carryforward	24.7			16.5
Other	47.4			46.7
Total deferred tax assets	560.8			638.9
Valuation allowance	(64.4		)	(68.3		)
Total deferred tax assets, net of valuation allowance	$	496.4		$	570.6
Deferred tax liabilities:
Property, plant and equipment	$	121.9		$	171.8
Other	4.9			3.8
Total deferred tax liabilities	126.8			175.6
Net deferred tax assets	$	369.6		$	395.0

As of December 31, 2014, the Company had approximately $665.2 million of federal tax operating loss carryforwards with a deferred tax asset value of $232.8 million, alternative minimum tax credit carryforwards of $24.7 million, state tax credits of $10.8 million, and $53.7 million in deferred tax assets related to state, local, and foreign tax operating loss carryforwards. The majority of the remaining tax loss carryforwards will generally expire in 2023. U.S. tax laws limit the annual utilization of tax loss carryforwards of acquired entities. These limitations should not materially impact the utilization of the tax carryforwards.

The ultimate realization of the deferred income tax assets depends upon the Company’s ability to generate future taxable income during the periods in which basis differences and other deductions become deductible, and prior to the expiration of the net operating loss carryforwards. Due to its historical and future projected earnings, management believes it will utilize future federal deductions and available net operating loss carryforwards prior to their expiration. Management also concluded that it was more likely than not that certain state and foreign tax loss carryforwards would not be realized based upon the analysis described above and therefore provided a valuation allowance.

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $26.3 million at December 31, 2014 and $23.5 million at December 31, 2013. Accrued interest and penalties on income tax uncertainties were immaterial as of December 31, 2014 and 2013.

A reconciliation of the unrecognized tax benefits is as follows:



	Year Ended December 31,
(dollars in millions)	2014		2013		2012
Balance, beginning of year	$	24.1	$	22.8	$	21.8
Change in tax positions for the current year	3.0		1.3		1.4
Change in tax positions for prior years	—		—		(0.4		)
Balance, end of year	$	27.1	$	24.1	$	22.8

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various foreign, state and local jurisdictions. With a few exceptions, the Company is no longer subject to U.S. federal, state or local examinations for years before 2011.