7. Income Taxes

Income tax expense (benefit) attributable to income (loss) from continuing operations is summarized as follows:

	SUCCESSOR								PREDECESSOR
	2012		2011			Nov-16, 2010- Dec-31, 2010			Jan-1, 2010- Nov-15, 2010

Current:
Federal	$	18,097	$	9,868		$	1,602		$	3,650
State	3,267		2,370			366			1,185
Foreign	334		393			182			95
Total current	21,698		12,631			2,150			4,930
Deferred:
Federal	2,399		6,250			2,372			(47,022		)
State	1,658		1,160			433			(8,576		)
Foreign	5		(36		)	(148		)	148
Total deferred	4,062		7,374			2,657			(55,450		)

Total income tax expense (benefit)	$	25,760	$	20,005		$	4,807		$	(50,520	)

A reconciliation of the U.S. Federal income tax rate of 35% to income tax expense (benefit) expressed as a percent of pretax income (loss) from continuing operations follows:

	SUCCESSOR						PREDECESSOR
	2012		2011		Nov-16, 2010- Dec-31, 2010		Jan-1, 2010- Nov-15, 2010

Current:
Federal income tax at the statutory rate	35.0	%	35.0	%	35.0	%	35.0	%
Increase in income tax expense (benefit)
State and foreign income taxes, net of federal benefits	4.3		4.4		4.1		3.6
Jobs tax credits, net	(2.3	)	(5.9	)	(3.1	)	1.4
Nondeductible expenses	0.4		(1.1	)	0.3		(1.5	)
Reserve for uncertain tax positions	1.3		—		—		—
Other	(0.1	)	—		—		—
Nondeductible impairments	—		—		—		(14.6	)
	38.6	%	32.4	%	36.3	%	23.9	%

On January 2, 2013, legislation was enacted that reinstated the jobs credit provisions retroactive to January 1, 2012. Under ASC 740, changes to tax laws are not recognized until the enactment date. Accordingly, the impact of the reinstatement of the jobs credit provisions will not be recognized until the first quarter of 2013.

As of December 31, 2012, we have state net operating loss carryforwards of approximately $68 million which are available to offset future taxable income, if any, of certain entities in certain states. These carryforwards will expire between 2013 and 2032. Application of some of these carryforwards is limited under the change of ownership provisions. These carryforwards have been partially or fully offset by valuation allowances, as our ability to apply these carryforwards may be limited.

As of December 31, 2012, we have federal foreign tax credit carryforwards of approximately $0.9 million. If not used, these carryforwards will expire between 2013 and 2019. These credit carryovers have been fully offset by a valuation allowance as our ability to apply these carryovers is subject to limitation.

During the period ended November 15, 2010, $0.4 million was debited to additional paid-in capital for tax shortfalls associated with share-based compensation.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

	SUCCESSOR
	2012			2011
Deferred tax assets:
Accounts receivable	$	9,191		$	9,611
Property and equipment	922			613
Workers’ compensation costs	12,043			12,663
Compensated absences	5,081			4,219
Share-based compensation	2,425			930
Other insurance reserves	11,835			12,172
Unfavorable lease adjustments	857			1,201
Other liabilities and reserves	2,174			1,868
Deferred state income tax net operating loss carryforwards	3,233			5,117
Deferred tax credits, foreign tax credit carryforwards and other	2,123			1,420
Total gross deferred tax assets	49,884			49,814
Less valuation allowance	3,659			5,323
Net deferred tax assets	46,225			44,491
Deferred tax liabilities:
Revenue adjustments	5,651			7,355
Property and equipment	5,971			7,308
Goodwill and other intangible assets	122,031			113,295
Deferred rents	378			1,014
Other	858			121
Total deferred tax liabilities	134,889			129,093
Net deferred tax liability	$	(88,664	)	$	(84,602	)
Classified as follows:
Current deferred income tax assets	$	17,589		$	13,668
Noncurrent deferred income tax liability	(106,253		)	(98,270		)
Net deferred tax liability	$	(88,664	)	$	(84,602	)

A valuation allowance for deferred tax assets was provided as of December 31, 2012 related to state income tax net operating loss carryforwards and federal foreign tax credit carryovers. The realization of deferred tax assets is dependent upon generating future taxable income when temporary differences become deductible. Based upon the historical and projected levels of taxable income, we believe it is more likely than not that we will realize the benefits of the deductible differences after consideration of the valuation allowance.

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

	SUCCESSOR								PREDECESSOR
	Dec-31, 2012			Dec-31, 2011			Nov-16, 2010 Dec-31, 2010		Jan-1, 2010- Nov-15, 2010
Balance at beginning of year	$	804		$	438		$	438	$	540
Increase related to prior year tax positions	1,478			—			—		—
Decrease related to prior year tax positions	(9		)	(37		)	—		(52		)
Increase related to current year tax positions	—			536			—		109
Settlements	—			(22		)	—		(34		)
Lapse of statute of limitations	(104		)	(111		)	—		(125		)
Balance at end of year	$	2,169		$	804		$	438	$	438

Included in the balance of total unrecognized tax benefits at December 31, 2012 are potential benefits of $0.1 million, which if recognized, would affect the effective tax rate on income from continuing operations.

We file numerous consolidated and separate income tax returns in the U.S. federal and various state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examinations by the taxing authorities for years prior to 2008. We believe that we have appropriate support for the income tax positions taken and to be taken on our income tax returns and that our accruals for income tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of the tax laws as applied to the facts of each matter. We do not expect that the amounts of unrecognized tax benefits will change significantly within the next twelve months.

Total accrued interest and penalties as of December 31, 2012 are approximately $0.1 million and are included in accrued expenses.