NOTE 14. INCOME TAXES

The components of the income tax expense consisted of the following:

$s in thousands	2014			2013			2012
Current:
U.S. Federal	$	13,767		$	14,769		$	13,989
State		2,492			2,241			1,905
Foreign		4,521			3,623			873

Total current		20,780			20,633			16,767
Deferred:
U.S. Federal		2,721			(2,068	)		(270	)
State		(155	)		(218	)		79
Foreign		(532	)		(351	)		(517	)

Total deferred		2,034			(2,637	)		(708	)

Income tax expense	$	22,814		$	17,996		$	16,059

A reconciliation between the effective income tax rate and the applicable statutory federal and state income tax rate is as follows:

	2014			2013			2012
Taxes computed at statutory rate		35.0	%		35.0	%		35.0	%
State income taxes (net of federal income tax benefit)		2.7			2.7			3.3
Non-deductible transaction costs		1.5			—			—
Foreign rate differential		(2.0	)		(2.0	)		(0.3	)
Other		0.2			0.2			0.5

		37.4	%		35.9	%		38.5	%

The components of the total net deferred tax assets and liabilities as of December 31, 2014 and 2013 consisted of the following:

$s in thousands	2014			2013
Deferred tax assets:
Net operating loss and foreign tax credit carry forwards	$	3,195		$	6,270
Accruals, allowances and other		4,432			1,708
Environmental compliance and other site related costs		10,305			554
Unrealized foreign exchange gains and losses		1,180			636
Unrealized gains and losses on interest rate hedge		1,098			—

Total deferred tax assets		20,210			9,168
Less: valuation allowance		(2,718	)		(6,253	)

Net deferred tax assets		17,492			2,915
Deferred tax liabilities:
Property and equipment		(110,652	)		(6,752	)
Intangible assets		(8,305	)		(9,425	)
Other		(1,623	)		(176	)

Total deferred tax liabilities		(120,580	)		(16,353	)

Net deferred tax liability	$	(103,088	)	$	(13,438	)

U.S. income tax has not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested outside the United States. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such temporary differences totaled $18.8 million as of December 31, 2014. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation.

As of December 31, 2014, we have federal net operating loss carry forwards ("NOLs") of approximately $1.3 million. The NOLs relate to losses incurred by EQ prior to our acquisition of EQ on June 17, 2014 and expire in 2034. U.S. income tax law limits the amount of losses that we can use on an annual basis. We believe it is more likely than not the entire federal NOL will be utilized.

We have historically recorded a valuation allowance for certain deferred tax assets due to uncertainties regarding future operating results and limitations on utilization of state NOLs for tax purposes. State NOLs expire between 2015 and 2021. Our gross state NOLs were decreased as a result of changes in various state laws impacting how NOLs are determined, which had no impact to our annual effective tax rate since these NOLs were entirely offset by the valuation allowance. The realization of a significant portion of net deferred tax assets is based in part on our estimates of the timing of reversals of certain temporary differences and on the generation of taxable income before such reversals. At December 31, 2014 and 2013, we continued to maintain a valuation allowance for approximately $1.0 million and $6.3 million, respectively, for state tax benefits that are not expected to be utilizable prior to expiration.

As of December 31, 2014, we have foreign tax credit carry forwards of approximately $1.7 million that expire in 2024. We believe it is not more likely than not the foreign tax credit carry forward will be utilized and therefore maintain a valuation allowance on the entire balance.

The domestic and foreign components of Income (loss) before income taxes consisted of the following:

$s in thousands	2014		2013		2012
Domestic		46,017		37,958		40,425
Foreign		15,033		12,189		1,293

Income before income taxes	$	61,050	$	50,147	$	41,718

The changes to unrecognized tax benefits (excluding related penalties and interest) consisted of the following:

$s in thousands	2014			2013		2012
Unrecognized tax benefits, beginning of year	$	438		$	438	$	438
Gross increases in tax positions in prior periods		—			—		—
Gross increases during the current period		—			—		—
Settlements		—			—		—
Lapse of statute of limitations		(438	)		—		—

Unrecognized tax benefits, end of year	$	—		$	438	$	438

Due to the expiration of certain statutes of limitations, during 2014 we reduced our unrecognized tax benefits by $480,000, including accrued interest, which had a favorable impact on our effective tax rate for the year.

We file a consolidated U.S. federal income tax return with the Internal Revenue Service ("IRS") as well as income tax returns in various states and Canada. We may be subject to examination by the IRS for tax years 2011 through 2014. Additionally, we may be subject to examinations by the Canada Revenue Agency as well as various state and local taxing jurisdictions for tax years 2010 through 2014. We are currently not aware of any examinations by taxing authorities.