E. Income Taxes

GBL and its greater than 80% owned operating subsidiaries file a consolidated federal income tax return. Accordingly, the income tax provision represents the aggregate of the amounts provided for all companies.

The provision for income taxes for the years ended December 31, 2013, 2012 and 2011 consisted of the following:

	2013			2012		2011
(In thousands)
Federal:
Current	$	52,411		$	28,362	$	37,293
Deferred		6,564			8,386		(1,417	)
State and local:
Current		7,217			4,855		4,995
Deferred		(6	)		118		(104	)
Total	$	66,186		$	41,721	$	40,767

A reconciliation of the Federal statutory income tax rate to the effective tax rate is set forth below:

	2013			2012			2011
Statutory Federal income tax rate		35.0	%		35.0	%		35.0	%
State income tax, net of Federal benefit		2.3			2.3			2.6
Other		(1.2	)		(1.7	)		(0.7	)
Effective income tax rate		36.1	%		35.6	%		36.9	%

Significant components of our deferred tax assets and liabilities are as follows:

	2013			2012
(In thousands)
Deferred tax assets:
Stock compensation expense		1,063		$	307
Deferred compensation		1,055			848
Intangible asset amortization		62			145
Capital lease obligation		807			768
Other		184			143
Total deferred tax assets		3,171			2,211
Deferred tax liabilities:
Investments in securities available for sale		(13,403	)		(7,408	)
Investments in securities and partnerships		(19,553	)		(12,502	)
Contingent deferred sales commissions		(962	)		(496	)
Total deferred tax liabilities		(33,918	)		(20,406	)
Net deferred tax liabilities	$	(30,747	)	$	(18,195	)

As a result of the accelerated vesting of the RSAs and in accordance with GAAP, an increase of $108,000 was recorded in additional paid in capital for the year ended December 31, 2012 as the actual tax benefit realized by the Company was greater than the previously recorded deferred tax benefit.

As of December 31, 2013 and 2012, the total amount of gross unrecognized tax benefits related to uncertain tax positions was approximately $12.9 million and $10.6 million, respectively, of which recognition of $8.4 million and $7.0 million, respectively, would impact the Company's effective tax rate.

As of December 31, 2013 and 2012, the net liability for unrecognized tax benefits related to uncertain tax positions was $12.0 million and $9.9 million, respectively, and is included in accrued expenses and other liabilities on the consolidated statements of financial condition.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits related to uncertain tax positions is as follows:

	(in millions)
Balance at January 1, 2011	$	8.8
Additions based on tax positions related to the current year		0.7
Additions for tax positions of prior years		-
Reductions for tax positions of prior years		(0.4	)
Settlements		-
Balance at December 31, 2011		9.1
Additions based on tax positions related to the current year		1.1
Additions for tax positions of prior years		0.5
Reductions for tax positions of prior years		-
Settlements		(0.1	)
Balance at December 31, 2012		10.6
Additions based on tax positions related to the current year		2.4
Additions for tax positions of prior years		0.5
Reductions for tax positions of prior years		(0.6	)
Settlements		-
Balance at December 31, 2013	$	12.9

The Company records penalties and interest related to tax uncertainties in income taxes. As of December 31, 2013 and 2012, the Company had recognized gross liabilities of approximately $5.2 million and $4.3 million related to interest and penalties, respectively. For the years ended December 31, 2013, 2012 and 2011, the Company recorded income tax expenses related to an increase in its liability for interest and penalties of $0.7 million, $0.6 million and $0.6 million, respectively.

The Company is currently being audited by New York State for years 2001 through 2006 but does not expect that any potential assessments will be material to its results of operations. The Company is subject to future audits by New York State for all years after 2006. The Company's remaining state income tax returns are subject to future audit for all years after 2008. The Company's Federal tax returns are subject to future audit for years after 2009.