Income Taxes

Deferred tax assets and liabilities as of December 31 are as follows:



	2016			2015
	(in thousands)
Deferred income tax assets:
Allowance for doubtful accounts	$	559		$	562
Accrued expenses	9,275			9,212
Stock-based compensation	254			529
Insurance accruals	29,190			28,159
State net operating loss carryforward	451			1,688
Indirect tax benefits of unrecognized tax benefits	3,334			4,262
Other	2			387
Total gross deferred tax assets	43,065			44,799
Less valuation allowance	—			—
Net deferred tax assets	43,065			44,799
Deferred income tax liabilities:
Property and equipment	(122,367		)	(133,720		)
Goodwill	(9,857		)	(3,725		)
Prepaid expenses	(1,713		)	(2,810		)
	(133,937		)	(140,255		)
Net deferred tax liability	$	(90,872	)	$	(95,456	)

The deferred tax amounts above have been classified in the accompanying consolidated balance sheets at December 31, 2016 and 2015 as follows:



	2016			2015
	(in thousands)
Current assets, net	$	—		$	16,662
Noncurrent assets, net	3,785			—
Long-term liabilities, net	(94,657		)	(112,118		)
	$	(90,872	)	$	(95,456	)

We have not recorded a valuation allowance against any deferred tax assets at December 31, 2016 and 2015. In management’s opinion, it is more likely than not that we will be able to utilize these deferred tax assets in future periods as a result of our history of profitability, taxable income, and reversal of deferred tax liabilities.

Income tax expense consists of the following:



	2016			2015		2014
	(in thousands)
Current income taxes:
Federal	$	34,664		$	33,364	$	6,860
State	454			2,703		855
	35,118			36,067		7,715
Deferred income taxes:
Federal	(5,291		)	5,170		36,706
State	(164		)	2,478		2,362
	(5,455		)	7,648		39,068
Total	$	29,663		$	43,715	$	46,783

The income tax provision differs from the amount determined by applying the U.S. federal tax rate as follows:



	2016			2015			2014
	(in thousands)
Federal tax at statutory rate (35%)	$	30,117		$	40,870		$	46,066
State taxes, net of federal benefit	1,135			4,022			2,737
Non-taxable interest income	(7		)	(6		)	(7		)
Uncertain income tax penalties and interest, net	(1,473		)	(1,006		)	(993		)
Other	(109		)	(165		)	(1,020		)
	$	29,663		$	43,715		$	46,783

At December 31, 2016 and December 31, 2015, we had a total of $8.8 million and $11.6 million in gross unrecognized tax benefits, respectively, included in long-term income taxes payable in the consolidated balance sheets. Of this amount, $5.7 million and $7.3 million represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate as of December 31, 2016 and December 31, 2015, respectively. Unrecognized tax benefits were a net decrease of $2.8 million and $1.1 million during the years ended December 31, 2016 and 2015, respectively, due mainly to the expiration of certain statutes of limitation net of additions and settlements with respective states. This had the effect of reducing the effective state tax rate during these respective periods. The total net amount of accrued interest and penalties for such unrecognized tax benefits was $3.2 million and $4.7 million at December 31, 2016 and December 31, 2015, respectively, and is included in income taxes payable in the consolidated balance sheets. Net interest and penalties included in income tax expense for the years ended December 31, 2016, 2015 and 2014 was a benefit of approximately $1.5 million, $1.0 million, and $1.0 million respectively. Income tax expense is increased each period for the accrual of interest on outstanding positions and penalties when the uncertain tax position is initially recorded. Income tax expense is reduced in periods by the amount of accrued interest and penalties associated with reversed uncertain tax positions due to lapse of applicable statute of limitations, when applicable or when a position is settled. Income tax expense was reduced during the years ended December 31, 2016, 2015 and 2014 due to reversals of interest and penalties due to lapse of applicable statute of limitations and settlements, net of additions for interest and penalty accruals during the same period. These unrecognized tax benefits relate to risks associated with state income tax filing positions for our corporate subsidiaries.

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



	2016			2015
	(in thousands)
Balance at January 1,	$	11,569		$	12,632
Additions based on tax positions related to current year	592			954
Additions for tax positions of prior years	—			—
Reductions for tax positions of prior years	(108		)	(90		)
Reductions due to lapse of applicable statute of limitations	(3,302		)	(1,927		)
Settlements	—			—
Balance at December 31,	$	8,751		$	11,569

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. We do not have any outstanding litigation related to tax matters. At this time, management’s best estimate of the reasonably possible change in the amount of gross unrecognized tax benefits is a decrease of approximately $1.8 million to a decrease of $2.8 million during the next twelve months, mainly due to the expiration of certain statute of limitations, net of additions. The federal statute of limitations remains open for the years 2013 and forward. Tax years 2006 and forward are subject to audit by state tax authorities depending on the tax code and administrative practice of each state.