Note 5. Income Taxes

Our income tax provision (benefit) is as follows:



	Year Ended December 31,
In thousands	2016			2015			2014
Current income tax expense (benefit)
Federal	$	—		$	(8,515	)	$	(42,500	)
State	(785		)	160			(407		)
Total current income tax benefit	(785		)	(8,355		)	(42,907		)

Deferred income tax expense (benefit)
Federal	(521,519		)	(1,853,517		)	400,544
State	(21,866		)	(78,662		)	29,429
Total deferred income tax expense (benefit)	(543,385		)	(1,932,179		)	429,973
Total income tax expense (benefit)	$	(544,170	)	$	(1,940,534	)	$	387,066

At December 31, 2016, we had tax-effected federal net operating loss carryforwards (“NOLs”) totaling $27.1 million, state NOLs totaling $42.6 million (before provision for valuation allowance), an estimated $51.1 million of enhanced oil recovery credits to carry forward related to our tertiary operations, an estimated $21.6 million of research and development credits, and $41.1 million of alternative minimum tax credits. Our state NOLs expire in various years, starting in 2019, although most do not begin to expire until 2036. Our enhanced oil recovery credits and research and development credits will begin to expire in 2023 and 2031, respectively.

Deferred income taxes reflect the available tax carryforwards and the temporary differences based on tax laws and statutory rates in effect at the December 31, 2016 and 2015 balance sheet dates. As of December 31, 2016, we had $36.5 million of deferred tax assets associated with State of Louisiana net operating losses. As the result of falling commodity prices, combined with a tax law enacted in the State of Louisiana effective June 30, 2015, which limits a company’s utilization of certain deductions, including our net operating loss carryforwards, we recognized tax valuation allowances totaling $33.6 million during 2015 and an additional $2.9 million during 2016, which reduced the carrying value of our deferred tax assets. The valuation allowances will remain until the realization of future deferred tax benefits are more likely than not to become utilized.

As of December 31, 2016, we had an unrecognized tax benefit of $5.4 million related to an uncertain tax position. The unrecognized tax benefit was recorded during 2015 as a direct reduction of the associated deferred tax asset and, if recognized, would not materially affect our annual effective tax rate. The tax benefit from an uncertain tax position will only be recognized if it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based upon the technical merits of the position. We currently do not expect a material change to the uncertain tax position within the next 12 months. Our policy is to recognize penalties and interest related to uncertain tax positions in income tax expense; however, no such amounts were accrued related to the uncertain tax position as of December 31, 2016.

In connection with the privately negotiated agreements to exchange a portion of our existing senior subordinated notes for 2021 Senior Secured Notes, we realized a tax gain due to the concession extended by our note holders during the second quarter of 2016. This tax gain was offset by net operating losses and other deferred tax asset attributes.

Significant components of our deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:



	December 31,
In thousands	2016			2015
Deferred tax assets
Loss carryforwards – federal	$	27,078		$	52,580
Loss carryforwards – state	42,625			37,175
Tax credit carryover	41,132			34,837
Business credit carryforwards	72,748			70,452
Derivative contracts	27,261			—
Stock-based compensation	10,306			23,468
Unrecognized gain and original issue discount on debt exchange	106,321			—
Other	38,834			34,236
Valuation allowance	(36,510		)	(33,600		)
Total deferred tax assets	329,795			219,148

Deferred tax liabilities
Property and equipment	(619,923		)	(1,004,330		)
Derivative contracts	—			(50,081		)
Other	(3,750		)	(16,826		)
Total deferred tax liabilities	(623,673		)	(1,071,237		)
Total net deferred tax liability	$	(293,878	)	$	(852,089	)

Our reconciliation of income tax expense computed by applying the U.S. federal statutory rate and the reported effective tax rate on income from continuing operations is as follows:



	Year Ended December 31,
In thousands	2016			2015			2014
Income tax provision (benefit) calculated using the federal statutory income tax rate	$	(532,121	)	$	(2,214,094	)	$	357,895
State income taxes, net of federal income tax benefit	(25,351		)	(117,624		)	25,368
Impairment of goodwill with no related tax basis	—			363,666			—
Tax shortfall on stock-based compensation deduction	9,557			—			—
Valuation allowance	2,910			33,600			—
Other	835			(6,082		)	3,803
Total income tax expense (benefit)	$	(544,170	)	$	(1,940,534	)	$	387,066

We file consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state jurisdictions. The statutes of limitation for our income tax returns for tax years ending prior to 2011 have lapsed and therefore are not available for examination by respective taxing authorities. We have not paid any significant interest or penalties associated with our income taxes.