Income Taxes

During 2014, the Company recorded an income tax benefit from continuing operations of approximately $7.9 million. The majority of this benefit relates to operating losses from continuing operations and the utilization of a portion of the Company's deferred tax assets to offset the income tax expense from discontinued operations. For 2014, the income tax expense from discontinued operations totaled approximately $8.2 million, arising primarily from the gain on the sale of StreetLinks. During 2013, the Company recorded income tax expense from continuing operations and discontinued operations of $57.7 million and $5.0 million, respectively. The majority of the 2013 expense represented a discrete event attributable to an adjustment of the valuation allowance against the Company's deferred tax assets, as discussed further below. The components of income tax benefit from continuing operations for 2014 and expense from continuing operations for 2013 were as follows (dollars in thousands):



	For the Year Ended December 31,
	2014			2013
Current:
Federal	$	(227	)	$	(313	)
State and local	3			(31		)
Total current	(224		)	(344		)

Deferred:
Federal	(6,663		)	52,013
State and local	(982		)	6,068
Total deferred	(7,645		)	58,081
Total income tax (benefit) expense	$	(7,869	)	$	57,737

A reconciliation of the expected federal income tax expense using the federal statutory tax rate of 35% to the Company’s actual income tax benefit and resulting effective tax rate for 2014 and 2013 were as follows (dollars in thousands):



	For the Year Ended December 31,
	2014			2013
Income tax at statutory rate	$	(6,773	)	$	(6,022	)
State income taxes, net of federal tax benefit	(870		)	(1,017		)
Valuation allowance	(2,740		)	63,250
Change in state tax rate	(85		)	198
State tax credits	—			(488		)
Adjustment to deferred tax asset	162			2,118
Expiration of loss carryforward	3,007			—
Uncertain tax positions	(504		)	(311		)
Other	(66		)	9
Total income tax (benefit) expense	$	(7,869	)	$	57,737

During 2013, the Company determined that it was no longer in a positive cumulative earnings position for the three year period ended December 31, 2013 and concluded that it was no longer more likely than not that it would realize a portion of its deferred tax assets. As such, the Company increased the valuation allowance by approximately $63.1 million during 2013, resulting in a full valuation allowance against the Company’s net deferred tax assets as of December 31, 2013. The Company maintained a full valuation allowance against its deferred tax assets as of December 31, 2014.

The Company's determination of the realizable deferred tax assets requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance, which could materially impact our financial position and results of operations. The Company will continue to assess the need for a valuation allowance in future periods. As of December 31, 2014 and 2013, the Company maintained a valuation allowance of $268.6 million and $283.0 million, respectively, for its deferred tax assets. During 2014, there was a decrease in the valuation allowance of approximately $14.4 million, of which $2.7 million was attributable to continuing operations, while $11.7 million was attributable to discontinued operations.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2014 and 2013 were as follows (dollars in thousands):



	December 31, 2014			December 31, 2013
Deferred tax assets:
Basis difference – investments	$	20,049		$	87,105
Federal net operating loss carryforwards	227,519			179,076
State net operating loss carryforwards	16,922			14,436
Other	5,102			3,519
Gross deferred tax asset	269,592			284,136
Valuation allowance	(268,592		)	(282,988		)
Deferred tax asset (A)	1,000			1,148
Deferred tax liabilities:
Other	1,000			1,148
Deferred tax liability (A)	1,000			1,148
Net deferred tax asset	$	—		$	—

(A)

The noncurrent portion of deferred tax assets is included in the deferred income tax assets, net line within the noncurrent assets section of the Company's consolidated balance sheets. As of both December 31, 2014 and 2013, the current portion of deferred tax assets was not material and is netted against the current deferred income tax liability in accordance with the relevant accounting guidance.

As of December 31, 2014, the Company had a federal net operating loss of approximately $650.1 million. The federal net operating loss may be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code (the "Code"). If not used, this net operating loss will expire in years 2025 through 2034. The Company has state net operating loss carryovers arising from both combined and separate filings from as early as 2004. The state net operating loss carryovers may expire as early as 2015 and as late as 2034. The Company has state tax credits of approximately $0.8 million, which will expire in 2027 through 2029.

The activity in the accrued liability for unrecognized tax benefits for the years ended December 31, 2014 and 2013 was as follows (dollars in thousands):



	For the Year Ended December 31,
	2014			2013
Beginning balance	$	731		$	1,062
Gross increases – tax positions in current period	300			35
Lapse of statute of limitations	(556		)	(366		)
Ending balance	$	475		$	731

As of December 31, 2014 and 2013, the total gross amount of unrecognized tax benefits was $0.5 million and $0.7 million, respectively, which also represents the total amount of unrecognized tax benefits that would impact the effective tax rate. The Company anticipates a reduction of unrecognized tax benefits in the amount of $0.1 million due the lapse of statute of limitations in the next twelve months. The Company does not expect any other significant change in the liability for unrecognized tax benefits in the next twelve months.

It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The benefit for interest and penalties recorded in income tax expense was not significant for 2014 and 2013. There were accrued interest and penalties of $0.1 million as of both December 31, 2014 and 2013.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and local jurisdictions. Tax years 2008 and 2011 to 2014 remain open to examination for both U.S. federal income tax and major state tax jurisdictions.