10.INCOME TAXES

The Company’s provision (benefit) for income taxes is summarized as follows:



	For the twelve months
Amounts in thousands	ended December 31,
	2014		2013
U.S. Federal - Current	$	(13)	$	25
U.S. Federal - Deferred		0		0
Provision for U.S. federal income taxes		(13)		25

Foreign - Current	$	1,931	$	1,616
Foreign - Deferred		(411)		(348)
Provision for foreign income taxes		1,520		1,268
Total provision for income taxes	$	1,507	$	1,294

The Company’s effective income tax rate differs from the statutory federal income tax rate as follows:



	2014		2013
U.S. Federal income tax statutory rate		34.0%		34.0%
Foreign income taxes		68.0%		(18.5%)
Equity in Polish investment		0.0%		(5.4%)
State income tax (net of federal benefit)		(15.0%)		(0.3%)
Meals, entertainment, gifts & giveaways		38.7%		1.8%
Statutory to GAAP adjustments, including foreign currency		(283.9%)		(3.0%)
Valuation allowance		532.4%		5.7%
Permanent and other items		(14.6%)		3.3%
Total provision for income taxes		359.7%		17.6%

The Company’s current year effective income tax rate was impacted due to losses in the United States, Poland and Mauritius. The comparison of pre-tax income of $0.4 million for the year ended December 31, 2014, compared to pre-tax income of $7.4 million for the year ended December 31, 2013 should be considered when comparing tax rates year over year. The overall effective tax rate of 359.7% is primarily driven by income tax expense recorded in jurisdictions with taxable that are not offset by tax benefits and in jurisdictions with losses that are not offset by tax benefits as a result of valuation allowances recorded against such losses. A majority of the earnings recognized by the Company during the year ended December 31, 2014 were at our properties in Canada. Based on permanent items and the impact of foreign currency exchange rates the earnings in the Company’s Canadian properties accounted for nearly 89% of the total tax expense recorded. There was no tax benefit recorded on the significant losses at the Company’s properties in the United States as those amounts are fully valued and no benefit can be recognized.

The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income.

The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The Company has a valuation allowance of $5.9 million on its U.S. deferred tax assets as of December 31, 2014 due to the uncertainty of future taxable income. The Company has a $3.5 million valuation allowance on the deferred tax assets of two of its Canadian properties as of December 31, 2014 due to the uncertainty of future taxable income. The Company also has a $1.6 million valuation allowance on CCE’s deferred tax assets as of December 31, 2014 due to the uncertainty of future taxable income. The ultimate realization of deferred income tax assets depends on generation of future taxable income in the jurisdictions where the assets are located during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax.

The Company’s deferred income taxes at December 31, 2014 and 2013 are summarized as follows:



Amounts in thousands	2014		2013
Deferred tax assets (liabilities) - U.S. Federal and state

Deferred tax assets - current:
Accrued liabilities and other	$	184	$	169
Deferred tax (liabilities) - current
Prepaid expenses		(157)		(67)
Valuation allowance		(179)		(167)
Net deferred tax (liabilities) - current		(152)		(65)

Deferred tax assets - non-current:
Amortization of goodwill for tax		421		473
Amortization of startup costs		275		317
Property and equipment		1,059		971
NOL carry forward		3,752		2,894
Accrued liabilities and other		409		675
Total deferred tax assets - non-current		5,916		5,330
Valuation allowance		(5,764)		(5,265)
Net deferred tax assets - non-current		152		65
Total deferred tax assets - U.S. federal and state	$	0	$	0

Deferred tax assets (liabilities) - foreign

Deferred tax assets - current:
NOL carryforward	$	0	$	0
Other		300		229
Deferred tax (liabilities) - current:
Other		0		(96)
Net deferred tax assets - current		300		133

Deferred tax assets - non-current
Property and equipment		1,521		1,771
NOL carry forward		4,583		2,483
Tax credits		199		262
Accrued liabilities and other		1,329		453
Exchange rate gain or (loss)		821		0
Deferred tax (liabilities) - non current:
Property and equipment		(2,204)		(2,477)
Contingent liability		(985)		(1,208)
Others		(230)		(223)
Valuation allowance		(5,129)		(1,400)
Net deferred tax (liabilities) - non-current		(95)		(339)
Total deferred tax (liabilities) - foreign	$	205	$	(206)
Net deferred tax (liabilities)	$	205	$	(206)

The Company has analyzed filing positions in all of the U.S. federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its U.S. federal tax return, its state tax return in Colorado and its foreign tax returns in Canada, Poland and South Africa, where it previously owned and operated casinos, as “major” tax jurisdictions, as defined by the Code.

The Company’s tax returns for the following periods are subject to examination:



Jurisdiction:		Periods
U.S. Federal		2007 - 2013
U.S. State - Colorado		2005 - 2013
Canada		2006 - 2013
South Africa		2009
Poland		2013

The Company has recognized a $0.1 million tax liability for an uncertain tax position on a foreign tax return. This adjustment has been recorded as a component of taxes payable in the accompanying consolidated balance sheet as of December 31, 2014. The Company may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results.

As of December 31, 2014, the Company had undistributed foreign earnings of approximately $46.2 million that it considers indefinitely reinvested and that as of December 31, 2014 the Company had not provided for taxes. Based on the Company’s capital, debt and liquidity position, there is no expected need for cash repatriation from foreign subsidiaries, and all cash held in foreign jurisdictions is considered permanently reinvested. These earnings could become subject to income taxes if they are remitted as dividends, are loaned to the Company or any of the Company’s subsidiaries located in the United States, or if the Company sells its stock in the foreign subsidiaries. However, the Company believes that any additional taxes could be offset, in part or in whole, by foreign tax credits.

The Company’s total amount of unrecognized tax benefit is summarized in the table below:



Amounts in thousands	2014		2013
Unrecognized tax benefit - January 1	$	146	$	191
Gross increases - tax positions in prior period		0		0
Gross decreases - tax positions in prior period		0		0
Gross increases - tax positions in current period		0		0
Settlements		0		0
Lapse of statute of limitations		(85)		(45)
Unrecognized benefit - December 31	$	61	$	146

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company accrued penalties and interest of less than $0.1 million during 2014 and in total, as of December 31, 2014, recognized a liability of less than $0.1 million. During 2013, the Company accrued no penalties and interest of less than $0.1 million and in total, as of December 31, 2014, recognized a liability less than $0.1 million.

Included in the balance of unrecognized tax benefits as of December 31, 2014 and 2013, is $0.1 million of tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance of unrecognized tax benefits at December 31, 2014 is $0.1 million, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

The Company’s U.S. and foreign pre-tax income is summarized in the table below:



Amounts in thousands	2014		2013
Income (loss) before taxes:
U.S.	$	(3,205)	$	(397)
Foreign		3,623		7,766
Total income before taxes	$	418	$	7,369