FEDERAL, FOREIGN AND STATE CURRENT AND DEFERRED INCOME TAX

The Company and its U.S. subsidiaries file a consolidated federal income tax return. Companies that are less than 80% owned corporations, or entities that are treated as partnerships for federal income tax purposes, file separate federal income tax returns. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

The significant components of deferred income tax assets and liabilities are as follows (in thousands):



	December 31,
	2014			2013
Deferred tax assets:
Deferred compensation	$	9,936		$	9,644
Impairment loss on securities	2,237			2,519
Impairment loss on water assets	16,856			14,532
Impairment loss on real estate	1,327			2,201
Capitalized expenses	9,451			12,393
Net operating losses, capital losses, and tax credit carryforwards	61,081			44,442
Legal settlement expense				1,311
Accumulated foreign currency translation adjustments	35			3,825
Employee benefits, including stock-based compensation	5,416			5,437
Excess tax basis in affiliate	5,659			4,035
Other, net	2,277			2,033
Total deferred tax assets	114,275			102,372
Deferred tax liabilities:
Unrealized appreciation on securities	(2,950		)	(3,853		)
Revaluation of real estate and water sales	(5,249		)	(5,187		)
Fixed assets	(13,077		)	(16,610		)
Foreign receivables				(5,573		)
Real estate installment sales				(401		)
Excess book basis in affiliate	(10,809		)	(9,930		)
Other, net	(4,007		)	(2,810		)
Total deferred tax liabilities	(36,092		)	(44,364		)
Valuation allowance	(80,940		)	(62,058		)
Net deferred income tax liability	$	(2,757	)	$	(4,050	)

The Company has reported a $2.8 million and $4.1 million net deferred tax liability at December 31, 2014, and December 31, 2013, respectively, related to the taxable temporary difference attributable to its investment in Mindjet which is not expected to reverse within a period that would allow it to be offset by existing deductible temporary differences.

Deferred tax assets and liabilities and federal income tax expense in future years can be significantly affected by changes in circumstances that would influence management’s conclusions as to the ultimate realization of deferred tax assets. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. At December 31, 2011, the Company considered it more likely than not that the deferred tax assets would not be realized and a full valuation allowance was provided. At December 31, 2014, after evaluating the positive and negative evidence, management concluded to maintain a full valuation allowance against its deferred tax assets. The Company has considered the following possible sources of taxable income when assessing the realization of the deferred tax assets: (1) future reversals of existing taxable temporary differences; (2) taxable income in prior carryback years; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. Reliance on future U.S. taxable income as an indicator that a valuation allowance is not required is difficult when there is negative evidence such as the Company's cumulative losses in recent years. In considering the evidence as to whether a valuation allowance is needed, the existence, magnitude and duration of such cumulative losses are factors that are accorded significant weight in the Company's assessment. As a result, a determination was made that there was not sufficient positive evidence to enable the Company to conclude that it was “more likely than not” that these deferred tax assets would be realized. Therefore, the Company has provided a full valuation allowance against the Company's net deferred tax assets. This assessment will continue to be undertaken in the future. The Company's results of operations may be impacted in the future by the Company's inability to realize a tax benefit for future tax losses or for items that will generate additional deferred tax assets.

The Company's results of operations might be favorably impacted in the future by reversals of valuation allowances if the Company is able to demonstrate sufficient positive evidence that the Company's deferred tax assets will be realized.

The Company had income tax net operating loss carryforwards, foreign tax credit carryforwards, and state capital loss carryforwards as of December 31, 2014, that will expire if not utilized. The following table summarizes such carryforwards and their expiration as follows (in thousands):



	Federal Net Operating Losses		Foreign Tax Credits		State Net Operating Losses		State Capital Losses
Expire 2015 through 2019			$	1,412	$	4,998	$	8,500
Expire 2020 through 2024			2,103		16,879
Expire 2025 through 2029					7,800
Expire 2030 through 2034	$	133,683			146,459
Total	$	133,683	$	3,515	$	176,136	$	8,500

Utilization of the Company's U.S. federal and certain state net operating loss and tax credit carryovers may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2014, the Company believes that utilization of its federal net operating losses and foreign tax credits are not limited under any ownership change limitations provided under the Internal Revenue Code.

Pre-tax loss from continuing operations was under the following jurisdictions (in thousands):



	Year Ended December 31,
	2014			2013			2012
Total pre-tax loss in the United States	$	(61,043	)	$	(25,432	)	$	(29,578	)

Income tax provision or benefit from continuing operations consists of the following (in thousands):



	Year Ended December 31,
	2014			2013		2012
Current tax provision (benefit)	$	(199	)	$	326	$	(941	)
Deferred tax provision (benefit)	(3,315		)	2,871		(128		)
Total income tax provision (benefit)	$	(3,514	)	$	3,197	$	(1,069	)

The difference between income taxes provided at the Company’s federal statutory rate and effective tax rate is as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Federal income tax provision at statutory rate	$	(21,365	)	$	(8,902	)	$	(10,352	)
Change in valuation allowance	16,710			12,491			7,505
State taxes, net of federal benefit	(184		)	(1,255		)	(299		)
Nondeductible compensation	1,567			1,370			1,357
Equity in loss of unconsolidated affiliate	(816		)	(198		)
Other	574			(309		)	720
Total income tax provision (benefit)	$	(3,514	)	$	3,197		$	(1,069	)

During the three years ended December 31, 2014, the Company had no uncertain tax positions or any related accrued interest or penalties.

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. As of December 31, 2014, the Company's statute is open from 2011 and 2009 forward for federal and for state tax purposes, respectively. During 2014, the U.S. Internal Revenue Service initiated an examination of the Company’s 2011 and 2012 federal income tax returns. The Company's 2006 through 2008 California income tax returns were examined by the California Franchise Tax Board and an adjustment was proposed, which the Company is contesting in an administrative proceeding. The Company believes that the results of the proceedings will not materially affect its financial position, results of operations, or cash flows.