6.Income Taxes

Income tax expense (benefit) consists of the following (in thousands):



	Years ended December 31,
	2014		2013		2012
Current:
Federal	$	151	$	-	$	-
State		842		435		(813)
Total		993		435		(813)
Deferred:
Federal		(1,015)		(18,873)		11,258
State		543		(1,287)		(182)
Total		(472)		(20,160)		11,076
Total income tax expense (benefit)	$	521	$	(19,725)	$	10,263

Basic paid $1.9 million in federal income taxes during 2014 and paid no federal income taxes during 2013. Basic paid federal income taxes of $601,000 during 2012.

Reconciliation between the amount determined by applying the federal statutory rate of 35% to income from continuing operations with the provision for income taxes is as follows (in thousands):



	Years ended December 31,
	2014		2013		2012

Statutory federal income tax	$	(2,737)	$	(19,479)	$	10,459
Meals and entertainment		825		660		672
State taxes, net of federal benefit		1,093		(966)		(758)
Goodwill impairment		1,380		-		-
Changes in estimates and other		(40)		60		(110)
	$	521	$	(19,725)	$	10,263

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):



	December 31,
	2014		2013
Deferred tax assets:
Receivables allowance	$	746	$	1,361
Inventory		146		273
Asset retirement obligation		625		573
Accrued liabilities		15,573		12,117
Operating loss carryforward		39,737		48,679
Goodwill and intangibles		9,659		1,768
Deferred compensation		12,008		10,693
Total deferred tax assets	$	78,494	$	75,464

Deferred tax liabilities:
Property and equipment		(209,650)		(206,562)
Prepaid expenses		(1,801)		(1,772)
Total deferred tax liabilities	$	(211,451)	$	(208,334)
Net deferred tax liability	$	(132,957)	$	(132,870)
Recognized as:
Deferred tax assets - current		14,664		31,436
Deferred tax liabilities - non-current		(147,621)		(164,306)
Net deferred tax liabilities	$	(132,957)	$	(132,870)

Basic provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. There was no valuation allowance recorded as of December 31, 2014 or 2013.

Interest is recorded in interest expense and penalties are recorded in income tax expense. Basic had no interest or penalties related to an uncertain tax positions during 2014. Basic files federal income tax returns and state income tax returns in Texas and other state tax jurisdictions. In general, the Company’s federal tax returns for fiscal years after 2005 currently remain subject to examination by appropriate taxing authorities.

As of December 31, 2014, Basic had approximately $99.3 million of net operating loss carryforwards (“NOL”) for federal income tax purposes, which begin to expire in 2032.