Income Taxes

We file a consolidated federal income tax return, consolidated unitary returns in certain states, and other separate state income tax returns for certain of our subsidiary companies.

The provision for income taxes consisted of the following:



	For the years ended December 31,
(in thousands)	2013			2012			2011

Current:
Federal	$	319		$	770		$	(27,918	)
State and local	(3,102		)	365			1,185
Total	(2,783		)	1,135			(26,733		)
Tax benefits of compensation plans allocated to additional paid-in capital	—			7,553			6,946
Total current income tax provision	(2,783		)	8,688			(19,787		)
Deferred:
Federal	15,467			18,023			16,637
Other	1,334			1,943			3,110
Total	16,801			19,966			19,747
Deferred tax allocated to other comprehensive income (loss)	(21,866		)	(11,669		)	(9,961		)
Total deferred income tax provision	(5,065		)	8,297			9,786
(Benefit) provision for income taxes	$	(7,848	)	$	16,985		$	(10,001	)

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:



	For the years ended December 31,
	2013		2012		2011

Statutory rate	35.0	%	35.0	%	35.0	%
Effect of:
State and local income taxes, net of federal income tax benefit	4.4		2.1		(1.8	)
Reserve for uncertain tax positions	35.7		(7.3	)	(1.9	)
Amended returns, settlements and other	16.5		—		7.6
Effective income tax rate	91.6	%	29.8	%	38.9	%

We believe adequate provision has been made for all open tax years.

The approximate effect of the temporary differences giving rise to deferred income tax assets (liabilities) were as follows:



	As of December 31,
(in thousands)	2013			2012

Temporary differences:
Property, plant and equipment	$	(44,448	)	$	(46,016	)
Goodwill and other intangible assets	(2,684		)	1,605
Investments, primarily gains and losses not yet recognized for tax purposes	4,750			3,128
Accrued expenses not deductible until paid	11,865			16,213
Deferred compensation and retiree benefits not deductible until paid	37,041			61,703
Other temporary differences, net	25			244
Total temporary differences	6,549			36,877
Federal and state net operating loss carryforwards	21,123			6,984
Valuation allowance for state deferred tax assets	(1,078		)	(556		)
Net deferred tax asset	$	26,594		$	43,305

Total federal operating loss carryforwards were $57 million and state operating loss carryforwards were $266 million at December 31, 2013. Our federal tax loss carryforwards and our state tax loss carryforwards expire through 2033. Because we file separate state income tax returns for certain of our subsidiary companies, we are not able to use state tax losses of a subsidiary company to offset state taxable income of another subsidiary company.

Deferred tax assets totaled $26.6 million at December 31, 2013. Management believes that it is more likely than not that we will realize the benefits of our federal deferred tax assets and therefore has not recorded a valuation allowance for our federal deferred tax assets. If economic conditions worsen, future estimates of taxable income could be lower than our current estimates, which may require valuation allowances to be recorded in future reporting periods.

We recognize state net operating loss carryforwards as deferred tax assets, subject to valuation allowances. At each balance sheet date, we estimate the amount of carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of the carryforwards that are not expected to be used prior to their expiration is included in the valuation allowance.

During 2013, deferred tax assets relating to employee share-based compensation from the vesting of RSU's and the exercise of stock options have not been recognized since we are in a net tax loss position in 2013. The additional tax benefits will be reflected as net operating loss carryforwards when we file our tax return for 2013, but the additional tax benefits are not recorded under GAAP until the tax deduction reduces taxes payable. The amount of unrecognized tax deductions for the year ended December 31, 2013 was approximately $23 million.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:



	For the years ended December 31,
(in thousands)	2013			2012			2011

Gross unrecognized tax benefits at beginning of year	$	16,386		$	21,240		$	20,010
Increases in tax positions for prior years	2,692			623			1,500
Decreases in tax positions for prior years	—			(1,287		)	(270		)
Decreases from lapse in statute of limitations	(2,670		)	(4,190		)	—
Settlements	(1,584		)	—			—
Gross unrecognized tax benefits at end of year	$	14,824		$	16,386		$	21,240

The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $8 million at December 31, 2013. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2013 and 2012, we had accrued interest related to unrecognized tax benefits of $2.4 million and $2.5 million, respectively.

We file income tax returns in the U.S. and in various state and local jurisdictions. We are routinely examined by tax authorities in these jurisdictions. At December 31, 2013, we are no longer subject to federal income tax examinations for years prior to 2012. For state and local jurisdictions, we are no longer subject to income tax examinations for years prior to 2009.

In 2013 and 2012, we recognized $3.1 million and $5.5 million, respectively, of previously unrecognized tax benefits primarily due to the lapse of the statute of limitations in certain tax jurisdictions.

During 2011, we settled the examinations of our 2005 to 2009 federal income tax returns with the Internal Revenue Service. Our tax benefit was increased $1.6 million due to the realization of previously unrecognized tax benefits.

Due to the potential for resolution of federal and state examinations, and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits balance may change within the next twelve months by as much as $7.0 million.