Income Taxes

The Company recorded a tax benefit on the net income/(loss) for the three months ended September 30, 2015 and 2014 of $0.7 million and $11.2 million, respectively, which equates to an effective tax rate of (1.2)% and 22.9%, respectively, by applying the projected full year effective rate. For the nine months ended September 30, 2015 and 2014, the Company recorded a tax benefit on net income/(loss) of $0.6 million and $28.1 million, respectively, which equates to an effective tax rate of (1.2)% and 23.2%, respectively, by applying the projected full year effective rate. For 2015, the projected annual effective tax rate differs from the 35% federal statutory rate primarily due to a decrease in the valuation allowance offset by tax expense related to state taxes. For 2014, the effective tax rate differs from the statutory rate primarily due to an increase in the valuation allowance offset by a tax benefit related to state taxes.

A reconciliation of the Company's statutory tax rate to its projected 2015 effective tax rate is presented below (in percentages):



	2015
Statutory federal income tax rate	35.0	%
State income tax, net of federal income tax	8.5
Other, net	0.9
Valuation allowance	(45.6	)
Effective income tax rate	(1.2	)%

The effective tax rate reflected in accumulated other comprehensive income for the three and nine months ended September 30, 2015 is 0%. The 0% effective tax rate in accumulated other comprehensive income is due to the tax benefit associated with the reduction in the valuation allowance offsetting tax expense on other net comprehensive income for the three and nine months ended September 30, 2015.

Deferred Income Taxes

Upon ratification of the collective bargaining agreements on February 22, 2015, a remeasurement of certain employee benefit obligations was required. See note (9) "Employee Benefit Plan" herein for additional information. For 2015, this will result in a reduction of the deferred tax asset associated with employee benefit plans of approximately $270 million as well as a reduction of the Company's valuation allowance against deferred tax assets of approximately $229 million.

At September 30, 2015, the Company had gross federal NOL carryforwards of $258.9 million after taking into consideration the NOL tax attribute reduction resulting from the Company's discharge of indebtedness upon emergence from Chapter 11 protection. The Company's remaining federal NOL carryforwards will expire from 2019 to 2035. At September 30, 2015, the Company had a net, after attribute reduction, state NOL deferred tax asset of $13.5 million. The Company's remaining state NOL carryforwards will expire from 2015 to 2035. The amount expiring in 2015 is negligible and fully reserved as part of the valuation allowance. At September 30, 2015, the Company had no alternative minimum tax credit carryover and had $4.9 million in state credit carryovers. Telecom Group completed an initial public offering on February 8, 2005, which resulted in an "ownership change" within the meaning of the United States federal income tax laws addressing NOL carryforwards, alternative minimum tax credits and other similar tax attributes. The Merger and the Company's emergence from Chapter 11 protection also resulted in ownership changes. As a result of these ownership changes, there are specific limitations on the Company's ability to use its NOL carryforwards and other tax attributes. The Company believes that it can use the NOLs even with these restrictions in place based on its current income projections.

Income Tax Returns

The Company and its eligible subsidiaries file consolidated income tax returns in the United States federal jurisdiction and certain consolidated, combined and separate entity tax returns, as required, with various state and local governments. The Company is no longer subject to United States federal, state and local, or non-United States income tax examinations by tax authorities for years prior to 2011. NOL carryovers from closed tax years may be subject to examination by federal or state taxing authorities if utilized in a year open to examination. As of September 30, 2015 and December 31, 2014, the Company does not have any significant jurisdictional income tax audits.