13. Income Taxes

For financial reporting purposes, income before taxes includes the following components:

	2014		2013		2012
United States	$	23,544	$	21,365	$	(1,468	)
Foreign		2,392		2,221		222

Total	$	25,936	$	23,586	$	(1,246	)

The components of income tax expense (benefit) for the years ended December 31, 2014, 2013 and 2012 were as follows:

	2014			2013			2012
Current provision:
U.S. federal	$	9,529		$	3,183		$	748
Foreign		801			734			233
State		1,622			2,163			(11,832	)

Total current		11,952			6,080			(10,851	)
Deferred provision:
U.S. federal		(1,534	)		2,301			6,069
Foreign		77			(91	)		(11	)
State		(10,692	)		531			1,173

Total deferred		(12,149	)		2,741			7,231

Income tax expense (benefit)	$	(197	)	$	8,821		$	(3,620	)

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred tax assets:
Net operating loss carry forwards	$	22,028		$	21,621
Accrued expenses		34,344			32,665
Accrued compensation		11,937			10,033
Book over tax cost unfavorable acquired lease contracts		25,153			30,547
Other		415			129

Gross deferred tax assets		93,877			94,995
Less: valuation allowance		(12,292	)		(21,340	)

Total deferred tax asset		81,585			73,655

Deferred tax liabilities:
Prepaid expenses		(651	)		(450	)
Undistributed foreign earnings		(806	)		(1,065	)
Tax over book depreciation and amortization		(16,686	)		(20,586	)
Tax over book goodwill amortization		(28,713	)		(28,713	)
Tax over book cost favorable acquired lease contracts		(19,790	)		(24,613	)
Equity investments in unconsolidated entities		(9,198	)		(4,921	)
Other		(563	)		(338	)

Total deferred tax liabilities		(76,407	)		(80,686	)

Net deferred tax liability	$	5,178		$	(7,031	)

Amounts recognized on the balance sheet consist of:

	2014			2013
Deferred tax asset, current	$	10,992		$	10,317
Deferred tax (liability), long term		(5,814	)		(17,348	)

Net deferred tax liability	$	5,178		$	(7,031	)

The accounting guidance for accounting for income taxes requires that the Company assess the realizability of deferred tax assets at each reporting period. These assessments generally consider several factors including the reversal of existing temporary differences, projected future taxable income, and potential tax planning strategies. The Company has valuation allowances totaling $12,292 and $21,340 at December 31, 2014 and 2013, respectively, primarily related to our state Net Operating Loss carryforwards ("NOLs") and state tax credit that the Company believes are not likely to be realized based on upon its estimates of future taxable income, limitations on the use of its state NOLs, and the carryforward life over which the state tax benefit is realized. The Company recognized a $9,048 benefit for the reversal of a valuation allowance for deferred tax assets established for the historical net operating losses. The valuation allowance was reversed due to changes in the New York tax laws effective March 31, 2014 and an entity restructuring undertaken in the fourth quarter of 2014, which resulted in the Company determining that the future benefit of the net operating loss carryforwards were more likely than not to be realized.

The Company has $21,292 of tax-effected state net operating loss carryforwards as of December 31, 2014, which will expire in the years 2015 through 2028. The utilization of the state net operating loss carryforwards of the Company are limited due to the ownership change in June 2004 and are also limited due to the Central Merger. The Company has $71 of tax-effected foreign net operating loss carryforwards related to its Canadian subsidiary.

Since 2005, the Company has treated its investment in its Canadian subsidiary as non-permanent in duration and provided taxes on the undistributed Canadian earnings. As of December 31, 2014, the Company treats approximately $2,400 of Canadian earnings as permanently reinvested to meet the Canadian subsidiary's working capital requirements. The amount of tax that may be payable on the distribution of such earnings to the United States is approximately $918. Generally, such amounts will become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. The Company has provided taxes for the remaining undistributed earnings of its Canadian subsidiary in excess of the permanently reinvested amount. The Company is treating its cumulative earnings of $4,619 in its Puerto Rico subsidiary as permanent in duration to satisfy current working capital requirements. The amount of tax that may be payable on a distribution of such earnings to the United States is $1,700.

A reconciliation of the Company's reported income tax provision (benefit) to the amount computed by multiplying book income / (loss) before income taxes by the statutory United States federal income tax rate is as follows:

	2014			2013			2012
Tax at statutory rate	$	9,078		$	8,255		$	(436	)
Permanent differences		966			844			4,534
State taxes, net of federal benefit		763			1,397			1,086
Effect of foreign tax rates		36			49			8
Uncertain tax positions		—			—			(8,104	)
Minority interest		(1,062	)		(936	)		(362	)
Equity investments in unconsolidated entities		2,386			—			—
Current year adjustment to deferred taxes		(1,331	)		3,960			—
Recognition of tax credits		(1,460	)		(1,699	)		(432	)
Other		(525	)		911			86

		8,851			12,781			(3,620	)
Change in valuation allowance		(9,048	)		(3,960	)		—

Income tax (benefit) expense	$	(197	)	$	8,821		$	(3,620	)

Taxes paid, which are for United States federal income tax, certain state income taxes, and foreign income taxes were $1,538, $1,331, and $3,651 in 2014, 2013 and 2012, respectively.

As of December 31, 2014, the Company has not identified any uncertain tax positions that would have a material impact on the Company's financial position. As a result of the Central Merger, the Company recorded $6,780, plus accrued interest of $5,328 and penalties of $678, for a state uncertain tax position as part of the opening balance sheet. Due to the lapsing of the statute of limitations for this position in the fourth quarter 2012, the Company decreased its uncertain tax position for the full amount of the liability previously established and reversed the previously accrued interest. As a result, the Company does not have any uncertain tax positions recorded as of December 31, 2014.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

	2014		2013		2012
Unrecognized tax benefits—January 1,	$	—	$	—	$	—
Gross adjustments—Central Merger		—		—		6,780
Gross increases—tax positions in prior period		—		—		—
Gross decreases—tax positions in prior period		—		—		—
Gross increases—tax positions in current period		—		—		—
Settlement		—		—		—
Lapse of statute of limitations		—		—		(6,780	)

Unrecognized tax benefits—December 31,	$	—	$	—	$	—

The Company recognizes potential interest and penalties related to uncertain tax positions, if any, in income tax expense. The tax years that remain subject to examination for the Company's major tax jurisdictions at December 31, 2014 are shown below:

2010 - 2014		United States—federal income tax
2007 - 2014		United States—state and local income tax
2011 - 2014		Foreign—Canada and Puerto Rico