6.Income Taxes

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



	Years ended December 31,
	2015		2014		2013
Current:
Federal	$	(151)	$	151	$	-
State		(9)		842		435
Total		(160)		993		435
Deferred:
Federal		(127,482)		(1,015)		(18,873)
State		(3,688)		543		(1,287)
Total		(131,170)		(472)		(20,160)
Total income tax expense (benefit)	$	(131,330)	$	521	$	(19,725)

Basic paid no federal income taxes during 2015 and 2014. Basic paid federal income taxes of $601,000 during 2013.

Reconciliation between the amount determined by applying the federal statutory rate of 35% to loss before income taxes to income (benefit) expense is as follows (in thousands):



	Years ended December 31,
	2015		2014		2013

Statutory federal income tax	$	(130,576)	$	(2,737)	$	(19,479)
Meals and entertainment		684		825		660
State taxes, net of federal benefit		(3,698)		1,093		(966)
Goodwill impairment		2,833		1,380		-
Changes in estimates and other		(573)		(40)		60
	$	(131,330)	$	521	$	(19,725)

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,
	2015		2014
Deferred tax assets:
Operating loss carryforward	$	130,826	$	39,737
Goodwill and intangibles		32,992		9,659
Accrued liabilities		14,028		15,573
Deferred compensation		12,988		12,008
Receivables allowance		976		746
Asset retirement obligation		672		625
Inventory		164		146
Valuation Allowances		(878)		-
Total deferred tax assets	$	191,768	$	78,494

Deferred tax liabilities:
Property and equipment		(195,211)		(209,650)
Prepaid expenses		(1,623)		(1,801)
Total deferred tax liabilities	$	(196,834)	$	(211,451)
Net deferred tax liability	$	(5,066)	$	(132,957)
Recognized as:
Deferred tax assets - current		13,484		14,664
Deferred tax liabilities - non-current		(18,550)		(147,621)
Net deferred tax liabilities	$	(5,066)	$	(132,957)

Basic provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. Based on this evaluation, as of December 31, 2015, a valuation allowance of approximately $878,000 has been recorded on the net deferred tax asset for state net operating loss carryforwards and other deductible temporary differences in certain state tax jurisdiction in order to measure only the portion of the deferred tax asset that more likely than not will be realized. The amount of the deferred tax asset considered realizable for U.S deferred tax assets and state deferred tax assets that do not have a valuation allowance necessary as of December 31, 2015, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced.

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 2015. Basic files federal income tax returns and state income tax returns in Texas and other state tax jurisdictions.

As of December 31, 2015, Basic had approximately $352.5 million of net operating loss carryforwards ("NOL"), for federal income tax purposes, which begin to expire in 2031 and $141.4 million of net operating loss carryforwards for state income tax purposes which begin to expire in 2016.