Income Taxes

For financial reporting purposes, earnings before income

taxes includes the following components:



	Year Ended December 31,
(millions)	2015		2014		2013
United States	$	21.7	$	23.5	$	21.4
Foreign	3.4		2.4		2.2
Total	$	25.1	$	25.9	$	23.6

The components of income tax expense (benefit) are as follows:



	Year Ended December 31,
(millions)	2015			2014			2013
Current provision
U.S. federal	$	11.5		$	9.5		$	3.2
Foreign	1.2			0.8			0.7
State	1.8			1.6			2.2
Total current	14.5			11.9			6.1
Deferred provision
U.S. federal	(4.9		)	(1.5		)	2.3
Foreign	0.1			0.1			(0.1		)
State	(4.9		)	(10.7		)	0.5
Total deferred	(9.7		)	(12.1		)	2.7
Income tax expense (benefit)	$	4.8		$	(0.2	)	$	8.8

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 are as follows:



	December 31,
(millions)	2015			2014
Deferred tax assets
Net operating loss carry forwards	$	20.6		$	22.0
Accrued expenses	34.1			34.3
Accrued compensation	12.1			12.0
Book over tax cost unfavorable acquired lease contracts	20.6			25.2
Other	0.7			0.4
Total gross deferred tax assets	88.1			93.9
Less: valuation allowance	(6.8		)	(12.3		)
Total deferred tax assets	81.3			81.6
Deferred tax liabilities
Prepaid expenses	(0.4		)	(0.6		)
Undistributed foreign earnings	(1.0		)	(0.8		)
Tax over book depreciation and amortization	(11.0		)	(16.7		)
Tax over book goodwill amortization	(28.7		)	(28.7		)
Tax over book cost favorable acquired lease contracts	(15.6		)	(19.8		)
Equity investments in unconsolidated entities	(8.8		)	(9.2		)
Other	(0.1		)	(0.7		)
Total deferred tax liabilities	(65.6		)	(76.5		)
Net deferred tax asset	$	15.7		$	5.1

Amounts recognized on the balance sheet consist of:



	December 31,
(millions)	2015		2014
Deferred tax asset, current	$	12.3	$	10.9
Other assets, net / Deferred tax (liability)	3.4		(5.8		)
Net deferred tax asset	$	15.7	$	5.1

The accounting guidance for accounting for income taxes requires that the Company assess the realisability 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 $6.8 million and $12.3 million at December 31, 2015 and 2014, 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 uses of its state NOLs, and the carryforward life over which the state tax benefit is realized. The Company recognized a $5.5 million benefit for the reversal of a valuation allowance for deferred tax assets established for the historical net operating losses. The valuation allowance was reversed primarily due to changes in the New York City tax laws enacted April 1, 2015 and an entity restructuring undertaken in the fourth quarter of 2015, 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 $19.7 million of tax-effected state net operating loss carryforwards as of December 31, 2015, which will expire in years 2016 through 2035. As noted above, 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.

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, 2015, the Company treats approximately $2.4 million 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 $1.0 million. 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 $5.6 million 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 $2.5 million.

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



	Year Ended December 31,
(millions)	2015			2014			2013
Tax at statutory rate	$	8.8		$	9.1		$	8.3
Permanent differences	1.4			1.0			0.8
State taxes, net of federal benefit	0.3			0.8			1.4
Effect of foreign tax rates	(0.1		)	—			—
Minority interest	(1.0		)	(1.1		)	(0.9		)
Equity investments in unconsolidated entities	—			2.4			—
Current year adjustment to deferred taxes	1.5			(1.3		)	4.0
Recognition of tax credits	(1.2		)	(1.5		)	(1.7		)
Other	0.6			(0.5		)	0.9
	10.3			8.9			12.8
Change in valuation allowance	(5.5		)	(9.1		)	(4.0		)
Income tax (benefit) expense	$	4.8		$	(0.2	)	$	8.8

Taxes paid, which are for United States federal income tax, certain state income taxes, and foreign income taxes were $18.1 million, $1.3 million, and $1.3 million in 2015, 2014 and 2013, respectively.

As of December 31, 2015, 2014 and 2013 the Company had not identified any uncertain tax positions that would have a material impact on the Company's financial position.

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 as of December 31, 2015 are shown below:



2011 - 2015		United States—federal income tax
2007 - 2015		United States—state and local income tax
2012 - 2015		Foreign—Canada and Puerto Rico