Income Taxes

The components of income tax expense were:



	2013			2012	2011
Current:
Federal	$	(525	)	—	(4,894	)
State	3,093			3,305	3,002
Deferred:
Federal	11,743			12,114	16,560
State	(176		)	123	(102	)
	$	14,135		15,542	14,566

The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes of $36,519, $37,860 and $35,444 in 2013, 2012 and 2011:



	2013			2012		2011
“Expected” federal income tax	$	12,782		13,251		12,405
Increase (decrease) in taxes attributable to:
State taxes, net of federal income tax benefit	1,836			2,108		1,934
Dividend received deduction	(60		)	(59	)	(58	)
Uncertain tax positions	(650		)	82		17
Other items, net	227			160		268
	$	14,135		15,542		14,566

The components of the net deferred tax liability as of December 31 was as follows:



	2013		2012
Deferred tax assets:
Advances and contributions	$	15,598	15,214
Unamortized investment tax credit	741		773
Pensions and postretirement benefits	4,405		4,565
California franchise tax	1,107		1,193
Net operating loss	5,814		6,439
Other	1,596		1,505
Total deferred tax assets	$	29,261	29,689
Deferred tax liabilities:
Utility plant	$	125,706	110,983
Pension and postretirement benefits	25,649		46,315
Investment in stock	3,228		2,487
Deferred gain and other-property related	13,107		14,440
Debt reacquisition costs	496		545
Other	1,811		2,498
Total deferred tax liabilities	$	169,997	177,268
Net deferred tax liabilities	$	140,736	147,579

Management evaluates the realizability of our deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on our ability to generate sufficient future taxable income during periods in which the deferred tax assets are expected to reverse. Based on all available evidence, management believes it is more likely than not that SJW Corp. will realize the benefits of these deferred tax assets.

As of December 31, 2013, the Company has a federal net operating loss carry forward of $16,610, which will expire in fiscal year 2031. This amount differs from the amount reported on the consolidated tax returns of $18,234 due to the adoption of ASU 2013-11 which provided explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists that can be utilized to offset unrecognized tax benefits.

The total amount of unrecognized tax benefits, before the impact of deductions for state taxes, excluding interest and penalties was $565 and $2,130 as of December 31, 2013 and 2012, respectively. The amount of tax benefits, net of any federal benefits for state taxes and inclusive of interest that would impact the effective rate, if recognized, is approximately $13 and $109 as of December 31, 2013 and 2012, respectively.

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



Balance at December 31, 2012	$	2,316
Increase related to tax positions taken during a prior year, including interest	139
Reductions related to tax positions taken in a prior year, including interest	(1,920		)
Balance at December 31, 2013	$	535

SJW Corp.'s policy is to classify interest and penalties associated with unrecognized tax benefits, if any, in tax expense. Accrued interest expense, net of the benefit of tax deductions which would be available on the payment of such interest, is approximately $13 as of December 31, 2013. SJW Corp. has not accrued any penalties for unrecognized tax benefits. The amount of interest recognized in 2013 was a benefit of $171.

SJW Corp. does not foresee material changes to its gross uncertain tax liability due to the lapse of the statute of limitations within the next 12 months following December 31, 2013.

The income tax examination by the Internal Revenue Service, which commenced on October 1, 2011 for fiscal years 2008 through 2011, was completed with no adjustments or changes on August 5, 2013. The Company is no longer subject to tax examination for fiscal years prior to 2012 for federal purposes and 2009 for state purposes.

SJW Corp. files U.S. federal income tax returns and income tax returns in various states. The open tax years for the jurisdictions in which SJW Corp. files are as follows:



Jurisdiction	Years Open
Federal	2012
California	2009 - 2012
Arizona	2009 - 2012
Connecticut	2010 - 2012
Florida	2010 - 2012
Tennessee	2010 - 2012
Texas	2009 - 2012