13. Income Taxes

Components of income tax expense (benefit) consist of the following (in thousands):

	Year Ended December 31,

	2013			2012			2011
Current:
Federal	$	120,030		$	83,905		$	54,132
State		20,099			13,949			8,948
Foreign		2,164			659			544


Total current		142,293			98,513			63,624
Deferred
Federal		(37,713	)		37,259			11,228
State		(9,059	)		(415	)		(2,428	)
Foreign		(1,055	)		182			641


Total deferred		(47,827	)		37,026			9,441


Other non-current
Federal		7,797			573			7,605
State		1,907			114			1,621
Foreign		173			3			(417	)


Total other		9,877			690			8,809


Total income tax expense	$	104,343		$	136,229		$	81,874

Presented below is a reconciliation of income taxes computed at the statutory federal tax rate to income tax expense as reported (in thousands):

	Year Ended December 31,

	2013			2012			2011
Federal tax provision computed at 35%	$	97,616		$	154,235		$	105,018
State tax provision, net of federal tax provision		8,320			9,149			5,549
General business credits		(13,346	)		(10,980	)		(15,776	)
Incentive stock option expense		(304	)		(479	)		(290	)
Section 199 deduction		(10,861	)		(15,629	)		(8,091	)
Nondeductible compensation expense		22,813			2,609			(2,607	)
Nondeductible expenses		105			(2,676	)		(1,929	)


Total income tax expense	$	104,343		$	136,229		$	81,874

Components of the net deferred tax asset are as follows (in thousands):

	As of December 31,

	2013			2012
Deferred tax assets:
General business credits	$	277		$	25,834
Impairment losses on investments		318			2,884
Realized losses on marketable investments		—			2,095
License fees capitalized for tax purposes		75,181			74,964
Nonqualified stock options		40,808			30,872
SERP		14,059			14,594
STAP awards		84,274			20,238
Other		28,118			31,534


Total deferred tax assets		243,035			203,015
Deferred tax liabilities:
Plant and equipment principally due to differences in depreciation		(32,725	)		(31,428	)
Other		(1,351	)		(1,221	)


Net deferred tax asset before valuation allowance		208,959			170,366
Valuation allowance		(2,507	)		(5,665	)


Net deferred tax assets	$	206,452		$	164,701

Deferred tax assets are reduced by a valuation allowance when, in our judgment, it is more likely than not that a portion or all of the deferred tax assets will not be realized. In evaluating our ability to realize deferred tax assets, we consider all available positive and negative evidence. Accordingly, we consider past operating results, forecasts of earnings and taxable income, the reversal of temporary differences and any prudent and feasible tax planning strategies. Future increases in the valuation allowance would result in a corresponding charge to earnings in the period such a determination is made. Conversely, future reductions to the valuation allowance would result in the recognition of a tax benefit in the period we conclude a reduction is warranted.

We expect to utilize all of our federal general business tax credits for tax-year 2013.

A reconciliation of the beginning and ending balances of unrecognized tax benefits for the years indicated is as follows (in thousands):


Unrecognized tax benefits at January 1, 2013	$	1,511
Gross increases—tax positions in prior period		1,325
Gross decreases—tax positions in prior period		—
Gross increases—tax positions in the current period		—
Gross decreases—tax positions in current period		—
Settlements		—
Lapse of statute of limitations		—


Unrecognized tax benefits at December 31, 2013	$	2,836




Unrecognized tax benefits at January 1, 2012	$	1,733
Gross increases—tax positions in prior period		146
Gross decreases—tax positions in prior period		(368	)
Gross increases—tax positions in the current period		—
Gross decreases—tax positions in the current period		—
Settlements		—
Lapse of statute of limitations		—


Unrecognized tax benefits at December 31, 2012	$	1,511




Unrecognized tax benefits at January 1 2011	$	7,406
Gross increases—tax positions in prior period		500
Gross decreases—tax positions in prior period		(7,406	)
Gross increases—tax positions in the current period		1,233
Gross decreases—tax positions in the current period		—
Settlements		—
Lapse of statute of limitations		—


Unrecognized tax benefits at December 31, 2011	$	1,733

During the year ended December 31, 2011, the Internal Revenue Service (IRS) completed its audits of our 2009 and 2008 tax years and based on the results of these audits, we decreased our reserves for uncertain tax positions by $7.4 million. Included in unrecognized tax benefits at December 31, 2013, 2012 and 2011, is $2.4 million, $1.0 million, and $1.3 million, respectively, of tax benefits that, if recognized, would impact the effective tax rate. As of December 31, 2013 and 2012, we accrued $249,000 and $35,000, respectively, in interest expense relating to uncertain state tax positions.

We are subject to federal and state taxation in the United States and various foreign jurisdictions. Currently, our 2012, 2011 and 2010 tax years are subject to examination by the IRS and by state taxing authorities. We are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.