NOTE 23 – Income Taxes

The provision for income taxes/(benefit) consists of the following (in thousands):


	Year Ended December 31,
	2011			2010			2009
Current taxes:
Federal	$	20,847		$	35,998		$	46,646
State		6,416			9,647			10,854
Foreign		(127	)		(19	)		—
		27,136			45,626			57,500
Deferred taxes:
Federal		20,262			(36,965	)		(5,844	)
State		5,958			(11,821	)		(7,040	)
Foreign		1,118			1,024			—
		27,338			(47,762	)		(12,884	)
Provision for income taxes/(benefit)	$	54,474		$	(2,136	)	$	44,616

Reconciliation of the statutory federal income tax rate with our company's effective income tax rate is as follows:


	Year Ended December 31,
	2011			2010			2009

Statutory rate	$	48,512		$	(80	)	$	42,145
State income taxes, net of federal income tax benefit		7,288			(845	)		6,052
Investment and jobs creation state tax credit, net of federal income tax effect		—			—			(3,444	)
Change in valuation allowance		(4,180	)		(767	)		—
Revaluation of deferred taxes		1,685			—			—
Other, net		1,169			(444	)		(137	)
	$	54,474		$	(2,136	)	$	44,616

Tax effect of temporary differences and carryforwards that comprise significant portions of deferred tax assets and liabilities (in thousands):

	December 31, 2011			December 31, 2010
Deferred tax assets:
Deferred compensation	$	128,515		$	144,773
Net operating loss carryforwards		28,432			35,397
Accrued expenses		26,359			22,280
Unrealized loss on investments		11,396			7,453
Depreciation		—			4,377
Receivable reserves		2,488			2,480
Investment and jobs creation credit		2,081			2,069
Other		513			1,807
Total deferred tax assets		199,784			220,636
Valuation allowance		(2,231	)		(6,287	)
		197,553			214,349
Deferred tax liabilities:
Goodwill and other intangibles		(14,249	)		(13,635	)
Prepaid expenses		(2,382	)		(3,575	)
Depreciation		(3,119	)		—
		(19,750	)		(17,210	)
Net deferred tax asset	$	177,803		$	197,139

Our net deferred tax asset at December 31, 2011 includes net operating loss and tax credit carryforwards of $118.1 million and $2.1 million, respectively that expire between 2012 and 2027. A valuation allowance is recorded to the extent that it is more likely than not that any portion of the deferred tax asset will not be realized. The valuation allowance was decreased by $4.1 million to adjust the tax benefit of certain state and foreign net operating loss carryforwards to the amount that we have determined is more likely than not to be realized. We believe the realization of the remaining net deferred tax asset of $177.8 million is more likely than not based on the ability to carry back losses against prior year taxable income and expectations of future taxable income.

The current tax receivable, included in other assets, is $10.0 million and $9.0 million as of December 31, 2011 and 2010, respectively.

Uncertain Tax Positions

As of December 31, 2011 and 2010, we had $3.1 million, respectively, of gross unrecognized tax benefits, all of which, if recognized, would impact the effective tax rate. We recognize interest and penalties related to uncertain tax positions in provision for income taxes/(benefits) in the consolidated statements of operations. As of December 31, 2011 and 2010, we had accrued interest and penalties of $1.0 million and $0.9 million, respectively, before benefit of federal tax deduction, included in accounts payable and accrued expenses on our consolidated statements of financial condition. The amount of interest and penalties recognized on our consolidated statements of operations for the years ended December 31, 2011, 2010, and 2009 was not significant.

The following table summarizes the activity related to our company's unrecognized tax benefits from January 1, 2009 to December 31, 2011 (in thousands):


	December 31, 2011			December 31, 2010			December 31, 2009

Beginning balance	$	3,138		$	2,046		$	2,015
Increase related to prior year tax positions		21			1,907			303
Decrease related to prior year tax positions		(1,075	)		(586	)		(157	)
Increase related to current year tax positions		1,260			35			233
Decreases related to settlements with taxing authorities		(253	)		—			(319	)
Decreases related to lapsing of statute of limitations		—			(264	)		(29	)
Ending balance	$	3,091		$	3,138		$	2,046

We file income tax returns with the U.S. federal jurisdiction, various states, and certain foreign jurisdictions. We are not subject to U.S. federal, certain state and local, or non-U.S. income tax examination by tax authorities for taxable years before 2006. Certain state returns are not subject to examination by tax authorities for taxable years before 2001.

There is a reasonable possibility that the unrecognized tax benefits will change within the next 12 months as a result of the expiration of various statutes of limitations or for the resolution of U.S. federal and state examinations, but we do not expect this change to be material to the consolidated financial statements.