Income Taxes

Income tax provision (benefit) applicable to continuing operations consists of the following:



	Year ended December 31,
(in thousands)	2015			2014		2013
Current:
Federal	$	(3,237	)	$	32,600	$	11,812
State and local	(762		)	5,677		225
Foreign	1,224			1,409		1,400
	$	(2,775	)	$	39,686	$	13,437

Deferred:
Federal	$	1,756		$	19,741	$	35,147
State and local	519			1,830		4,321
Foreign	258			244		906
	$	2,533		$	21,815	$	40,374

Total:
Federal	$	(1,481	)	$	52,341	$	46,959
State and local	(243		)	7,507		4,546
Foreign	1,482			1,653		2,306
	$	(242	)	$	61,501	$	53,811

Income (loss) before income taxes from continuing operations consists of the following:



	Year ended December 31,
(in thousands)	2015			2014		2013
U.S.	$	(18,867	)	$	174,262	$	141,673
Foreign	7,303			9,884		7,840
	$	(11,564	)	$	184,146	$	149,513

A reconciliation from the statutory U.S. federal tax rate to the effective tax rate follows:



	Year ended December 31,
	2015		2014		2013
Statutory U.S. federal tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in rate resulting from:
Effect of qualified domestic production deduction	—		(1.4	)	(0.4	)
Effect of Patient Protection and Affordable Care Act	—		—		0.9
Effect of noncontrolling interest	5.3		(2.5	)	(1.3	)
State and local income taxes, net of related federal taxes	1.4		2.7		2.0
Income taxes on foreign earnings	9.4		(0.4	)	0.1
Change in pre-acquisition tax liability and other costs	3.5		—		0.4
Tax associated with accrued and unpaid dividends	(13.6	)	—		—
Goodwill impairment	(35.6	)	—		—
Nondeductible compensation	(5.0	)	0.2		0.1
Other, net	1.7		(0.2	)	(0.8	)
Effective tax rate	2.1	%	33.4	%	36.0	%

Income taxes paid, net of refunds received, in 2015, 2014 and 2013 were $4.9 million, $36.8 million and $5.3 million, respectively.

Significant components of the Company's deferred tax liabilities and assets are as follows:



	December 31,
(in thousands)	2015			2014
Deferred tax liabilities:
Property, plant and equipment and Rail Group assets leased to others	$	(170,588	)	$	(133,869	)
Prepaid employee benefits	—			(18,453		)
Equity method investments	(45,673		)	(36,045		)
Other	(22,261		)	(5,388		)
	(238,522		)	(193,755		)
Deferred tax assets:
Employee benefits	27,160			52,107
Accounts and notes receivable	2,611			1,784
Inventory	11,918			9,964
Net operating loss carryforwards	4,542			1,155
Other	13,583			148
Total deferred tax assets	59,814			65,158
Valuation allowance	(593		)	(232		)
	59,221			64,926
Net deferred tax liabilities	$	(179,301	)	$	(128,829	)

On December 31, 2015, the Company had $8.2 million, $55.6 million and $1.7 million of U.S. Federal, state and non-U.S. net operating loss carryforwards that begin to expire in 2035, 2017 and 2031, respectively. The Company also had U.S. foreign tax credits of $0.6 million that expire after 2025.

The Company or one of its subsidiaries files income tax returns in the U.S., various foreign jurisdictions and various state and local jurisdictions. The Company is no longer subject to examinations by foreign jurisdictions for years before 2010 and is no longer subject to examinations by U.S. tax authorities for years before 2011. During 2014, the Internal Revenue Service commenced an examination of the Company’s U.S. income tax returns for years 2011 and 2012. The Company is no longer subject to examination by state tax authorities in most states for tax years before 2012.

A reconciliation of the January 1, 2013 to December 31, 2015 amount of unrecognized tax benefits is as follows:



(in thousands)
Balance at January 1, 2013	$	1,046
Additions based on tax positions related to the current year	114
Reductions based on tax positions related to prior years	(45		)
Reductions as a result of a lapse in statute of limitations	(5		)
Balance at December 31, 2013	1,110

Additions based on tax positions related to the current year	125
Additions based on tax positions related to prior years	384
Reductions as a result of a lapse in statute of limitations	(132		)
Balance at December 31, 2014	1,487

Additions based on tax positions related to the current year	55
Additions based on tax positions related to prior years	691
Reductions based on tax positions related to prior years	(518		)
Reductions as a result of a lapse in statute of limitations	(284		)
Balance at December 31, 2015	$	1,431

The Company anticipates a $0.5 million decrease in the reserve during the next 12 months due to the settling of state tax appeals. Dependent upon the outcome, the total liability for unrecognized tax benefits as of December 31, 2015 could impact the effective tax rate.

The Company has elected to classify interest and penalties as interest expense and penalty expense, respectively, rather than as income tax expense. The Company has $0.6 million accrued for the payment of interest and penalties at December 31, 2015. The net interest and penalties expense for 2015 is $0.1 million, due to increased uncertain tax positions. The Company had $0.4 million accrued for the payment of interest and penalties at December 31, 2014. The net interest and penalties expense for 2014 was $0.2 million.