10. Income Taxes

Provision for Income Taxes

The provision for income taxes relating to continuing operations consists of the following (in thousands):


	December 31,
	2016		2015		2014
Current—
Federal	$	32,721	$	27,564	$	13,402
State and Puerto Rico		4,683		4,065		2,810
		37,404		31,629		16,212
Deferred—
Federal		(2,101)		(1,481)		(308)
State and Puerto Rico		862		1,076		(4,290)
		(1,239)		(405)		(4,598)
	$	36,165	$	31,224	$	11,614

The difference in income taxes provided for and the amounts determined by applying the federal statutory tax rate to income before income taxes results from the following (in thousands):


	December 31,
	2016		2015		2014
Income tax expense at the statutory rate of 35%	$	35,371	$	31,032	$	14,080
Changes resulting from—
State income taxes, net of federal tax effect		4,262		3,432		1,653
Increase (decrease) in valuation allowance		(1,254)		463		(1,944)
Increase (decrease) in tax contingency reserves		20		(72)		(40)
Increase (decrease) from noncontrolling interests		—		(2,827)		(1,938)
Non-deductible expenses		825		751		704
Equity based stock compensation deduction		(885)		—		—
Production activity deduction		(2,026)		(1,701)		(694)
Purchase accounting adjustments		—		—		(46)
Other		(148)		146		(161)
	$	36,165	$	31,224	$	11,614

Deferred Tax Assets (Liabilities)

Significant components of the net deferred tax assets and net deferred tax liabilities as reflected on the balance sheet are as follows (in thousands):


	Year Ended
	December 31,
	2016		2015
Deferred income tax assets—
Accounts receivable and allowance for doubtful accounts	$	1,627	$	1,889
Stock compensation		3,036		3,080
Accrued liabilities and expenses		23,000		19,174
State net operating loss carryforwards		5,053		6,781
Goodwill		875		—
Other		759		830
Total deferred income tax assets		34,350		31,754
Deferred income tax liabilities—
Property and equipment		(4,398)		(5,572)
Long-term contracts		(637)		(728)
Goodwill		—		(6,037)
Intangible assets		(737)		(156)
Other		(513)		(357)
Total deferred income tax liabilities		(6,285)		(12,850)
Less—Valuation allowance		(3,184)		(4,438)
Net deferred income tax assets	$	24,881	$	14,466

The deferred income tax assets and liabilities reflected above are included in the consolidated balance sheet as follows (in thousands):


	December 31,
	2016		2015
Deferred income tax assets	$	27,170	$	16,276
Deferred income tax liabilities	$	2,289	$	1,810

As of December 31, 2016, we had $5.1 million of future tax benefits related to $70.4 million of available federal, state and Puerto Rican net operating loss carryforwards (“NOLs”), which expire between 2017 and 2036. A valuation allowance of $3.2 million has been recorded against certain state and Puerto Rican net deferred tax assets. We recorded a decrease in valuation allowances of $1.3 million for the year ended December 31, 2016. Our deferred tax assets for Puerto Rico are fully valued. A deferred tax asset for state NOLs, net of related valuation allowance, of $2.2 million reflects our conclusion that it is likely that this asset will be realized based upon expected future earnings in certain subsidiaries. We update this assessment of the realizability of deferred tax assets relating to state net NOLs annually. A return to profitability in our entities with valuation allowances on their NOL’s and deferred tax assets would result in a reversal of a portion of the valuation allowance relating to realized deferred tax assets. A sustained period of profitability could cause a change in our judgment of the remaining deferred tax assets. If that were to occur then it is likely that we would reverse some or all of the remaining deferred tax asset valuation allowance.

As of December 31, 2016 and 2015, approximately $0.2 million of unrecognized tax benefits, if recognized in future periods, would impact our effective tax rate. This liability is included in “Other Long‑Term Liabilities” in the consolidated balance sheets. We do not expect that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. We had accrued approximately $0.4 million and $0.3 million for the payment of interest and penalties at December 31, 2016 and 2015, respectively. Our tax records are subject to review by the Internal Revenue Service for the 2013 tax year forward and by various state authorities for the 2008 tax year forward.

Liabilities for Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties, is as follows (in thousands):


	Year Ended
	December 31,
	2016		2015		2014
Balance at beginning of year	$	240	$	343	$	413
Additions based on tax positions related to the current year		—		—		—
Additions for tax positions of prior years		—		—		—
Reductions for tax positions of prior years		—		(103)		(70)
Settlements		—		—		—
Balance at end of year	$	240	$	240	$	343