Note 11. Income Taxes

Our provision for income taxes consists of the following:


	For the year ended December 31,
	2014		2013		2012
Current:
Federal	$	—	$	—	$	—
State		576		600		375
		576		600		375
Deferred:
Federal		—		—		—
State		—		—		—
		—		—		—
Income tax provision	$	576	$	600	$	375

A reconciliation of our effective tax rate and the U.S. federal statutory income tax rate is as follows:


	For the year ended December 31,
	2014		2013		2012
Taxes at statutory U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
Nontaxable income of SNH	(35.0)	%	(35.0)	%	(35.0)	%
State and local income taxes, net of federal tax benefit	0.3	%	0.4	%	0.3	%
Change in valuation allowance	6.39	%	3.49	%	2.4	%
Other differences, net	(6.39)	%	(3.49)	%	(2.4)	%
Effective tax rate	0.3	%	0.4	%	0.3	%

Deferred income tax balances reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities on our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Significant components of our deferred tax assets and liabilities are as follows:


	For the year ended December 31,
	2014		2013
Deferred tax assets:
Deferred income	$	2,724	$	2,655

Other		206		332
Tax loss carryforwards		17,266		7,373
		20,196		10,360
Valuation allowance		(20,196)		(10,203)
		—		157
Deferred tax liabilities:
Depreciable assets		—		(157)
		—		—
Net deferred income taxes	$	—	$	—

Deferred tax liabilities are included in other liabilities in the accompanying consolidated balance sheets.

Because of our TRSs’ short operating history and history of losses, we are not able to conclude that it is more likely than not we will realize the future benefit of our deferred tax assets; thus we have provided a 100% valuation allowance as of December 31, 2014 and 2013. If and when we believe it is more likely than not that we will recover our deferred tax assets, we will reverse the valuation allowance as an income tax benefit in our consolidated statement of operations. As of December 31, 2014, our consolidated TRSs had net operating loss carry forwards for federal income tax purposes of approximately $43,710, which, if unused, begin to expire in 2031. In the normal course of business, income tax authorities in various income tax jurisdictions conduct routine audits of our income tax returns filed in prior years. Income tax years subsequent to 2009 may be open to examination in some of the income tax jurisdictions in which we operate.