11.	Income Taxes

The provision (benefit) for income taxes consisted of the following (in thousands).

	Year Ended December 31,
	2015			2014			2013
Federal:
Current	$	20		$	228		$	175
Deferred		(893	)		(19,098	)		(4	)
		(873	)		(18,870	)		171
State:
Current		255			650			476
Deferred		(24	)		(125	)		3
		231			525			479
	$	(642	)	$	(18,345	)	$	650

The provision (benefit) for income taxes differs from the amounts computed by applying the statutory federal corporate tax rate of 35% to income (loss) before income taxes as a result of the following (in thousands).

	Year Ended December 31,
	2015			2014			2013
Provision (benefit) for income taxes at statutory rate	$	(900	)	$	3,403		$	3,440
Tax effect of:
Tax-exempt investment income		(22	)		(21	)		(27	)
Change in the beginning of the period balance of the valuation allowance for deferred tax assets allocated to federal income taxes		9			(22,427	)		(4,277	)
Stock-based compensation		22			137			1,133
State income taxes, net of federal income tax benefit and state valuation allowance		142			525			479
Permanent items		107			38			(98	)
	$	(642	)	$	(18,345	)	$	650

The tax effects of temporary differences that give rise to the net deferred tax assets and liabilities are presented below (in thousands).

	Year Ended December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforwards	$	6,859		$	6,180
Stock-based compensation		421			402
Unearned premiums and loss and loss adjustment expense reserves		6,797			5,614
Goodwill and identifiable intangible assets		4,252			5,404
Alternative minimum tax (“AMT”) credit carryforwards		2,015			2,004
Accrued expenses and other nondeductible items		1,551			1,201
Other		3,528			3,127
		25,423			23,932
Deferred tax liabilities:
Deferred acquisition costs		(1,928	)		(1,211	)
Identifiable intangible assets		(1,872	)		(1,872	)
Net unrealized change on investments		(1,244	)		(2,105	)
Other		(332	)		(460	)
		(5,376	)		(5,648	)
Total net deferred tax asset		20,047			18,284
Less: Valuation allowance		(1,746	)		(1,763	)
Net deferred tax asset	$	18,301		$	16,521

The Company had a valuation allowance of approximately $1.8 million at both December 31, 2015 and 2014, relating to certain amounts that are more likely than not to be realized. The change in the valuation allowance for the year ended December 31, 2015 was not material.

Prior to December 31, 2014, the Company had a full valuation allowance against its deferred tax asset based upon past negative evidence in the form of historical taxable losses. Based upon positive evidence from recent taxable income and the Company’s outlook for future profitability, the deferred tax valuation allowance for the year ended December 31, 2014 was decreased by $22.4 million to include only the amounts referred to above. For the year ended December 31, 2014, the change in the valuation allowance included a decrease of $1.2 million related to the unrealized change on investments included in other comprehensive income (loss) and was net of the utilization of $9.8 million in NOL carryforwards.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the net deferred tax asset will not be realized. The Company is required to assess whether a valuation allowance should be established against the Company’s net deferred tax asset based on the consideration of all available evidence using a more likely than not standard. In making such judgments, significant weight is given to evidence that can be objectively verified. In assessing the Company’s ability to support the realizability of its net deferred tax asset, management considers both positive and negative evidence. In establishing a full deferred tax valuation allowance from June 30, 2009 through September 30, 2014, the Company placed greater weight on historical results than on the Company’s outlook for future profitability. Negative evidence, including a twelve quarter cumulative taxable loss, resulted in the establishment of a full valuation allowance. As of December 31, 2014, the Company’s historical results reflected a twelve quarter cumulative taxable income which management considered to be a trend of positive evidence in assessing the realizability of its net deferred tax asset. Based on this fact and the Company’s outlook for future profitability, the deferred tax asset valuation allowance was adjusted as of December 31, 2014 and resulted in the aforementioned change in the valuation allowance.

The change in the total valuation allowance for the year ended December 31, 2013 was a decrease of $4.3 million. For the year ended December 31, 2013, the change in the valuation allowance included decreases of $1.9 million related to the unrealized change on investments included in other comprehensive income (loss) and was net of the utilization of $8.6 million in NOL carryforwards.

At December 31, 2015, the Company had gross federal NOL carryforwards of $19.6 million that begin to expire in 2031. In addition, the Company had AMT credit carryforwards of $2.0 million that have no expiration date. At December 31, 2015, the Company had gross state NOL carryforwards of $8.5 million that begin to expire in 2020.