6. INCOME TAXES

At December 31, 2014, our valuation allowance on deferred tax assets was approximately $28.7 million. Since 2008, the Company has maintained a full valuation allowance on its net deferred tax asset position. In each reporting period, we have assessed the available positive and negative evidence to estimate if sufficient future taxable income would be generated to utilize the existing deferred tax assets. Our history of operating losses limited the weight we applied to other subjective evidence such as our projections for future profitability. Before we changed our judgment on the need for a full valuation allowance, a sustained period of operating profitability was required.

At September 30, 2015, our operations were in a position of cumulative profits for the most recent periods. We concluded that as a result of (i) our cumulative profits, (ii) achieving full year profitability in 2013 and 2014, (iii) the issuance of the DEQ final record of decision on our formerly owned property in Montana and our subsequent completion of the final RAWP approved by DEQ, (iv) our business results through September 30, 2015, and (v) our projections of continued profitability for 2016 and beyond, that it is more likely than not that a significant portion of our deferred tax assets will be realized. Accordingly, in the third quarter of 2015, we released a significant portion of our valuation allowance on our net deferred tax assets, resulting in a $21.7 million benefit in our provision for income taxes. The remaining valuation allowance as of September 30, 2015 is $7.0 million and relate primarily to certain state net operating loss carryforwards that are not more likely than not to be realized in future periods.

The income tax benefit from continuing operations for the nine months ended September 30, 2015 was $17.4 million on income before taxes of $11.3 million. The income tax benefit from discontinued operations for the nine months ended September 30, 2015 was $1.8 million on a net loss before taxes of $4.9 million. For 2014, no income tax expense was recorded on income of $6.2 million. In 2015, the difference between our effective tax rate and the U.S. statutory rate was primarily due to the release of a significant portion of the valuation allowance on our net deferred tax assets, as discussed above. In 2014, the difference between our effective tax rate and the U.S. statutory rate was primarily due to continuing to maintain a full valuation allowance against our net deferred tax assets.

In the periods after which our valuation allowance is released, we expect an increase in our effective tax rate as a result of recording tax expense on our earnings. At September 30, 2015, the Company had gross deferred tax assets of $35.0 million and a valuation allowance $7.0 million, netting to deferred tax assets of $28.0 million. The Company had deferred tax liabilities of $8.7 million at September 30, 2015. After classifying $3.5 million of short-term deferred tax assets against short-term deferred tax liabilities, the Company had net current deferred tax liabilities of $5.2 million, as well as long-term deferred tax assets of $24.5 million at September 30, 2015.

A reconciliation of income tax based on the application of the statutory federal income tax rate to income taxes as set forth in the consolidated statement of operation follows:

	Nine Months Ended
	September 30, 2015
Income from continuing operations before income taxes	$	11.3

Federal taxes at statutory rate	$	4.0		35.0	%
State taxes at statutory rate	$	0.2		2.0	%
Nondeductible items	$	0.1		0.9	%
Change in valuation allowance	$	(21.7	)	-191.3	%
Income tax benefit from continuing operations		(17.4	)	-153.4	%