NOTE 9: INCOME TAXES

The components of earnings (loss) from continuing operations before income taxes are as follows:



in thousands	2013	2012	2011
Earnings (Loss) from Continuing
Operations before Income Taxes
Domestic	$ (34,239)	$ (134,929)	$ (169,758)
Foreign	30,536	14,511	16,020
Total	$ (3,703)	$ (120,418)	$ (153,738)

Provision for (benefit from) income taxes from continuing operations consists of the following:



in thousands	2013	2012	2011
Provision for (Benefit from) Income Taxes
from Continuing Operations
Current
Federal	$ (3,691)	$ (5,631)	$ 4,424
State and local	7,941	5,271	5,482
Foreign	5,423	2,273	4,412
Total	$ 9,673	$ 1,913	$ 14,318
Deferred
Federal	$ (20,581)	$ (58,497)	$ (76,558)
State and local	(13,542)	(8,464)	(15,397)
Foreign	(9)	(1,444)	(846)
Total	$ (34,132)	$ (68,405)	$ (92,801)
Total benefit	$ (24,459)	$ (66,492)	$ (78,483)

The benefit from income taxes differs from the amount computed by applying the federal statutory income tax rate to losses from continuing operations before income taxes. The sources and tax effects of the differences are as follows:



dollars in thousands		2013		2012		2011
Income tax benefit at the
federal statutory tax rate of 35%	$ (1,296)	35.0%	$ (42,146)	35.0%	$ (53,809)	35.0%
Provision for (Benefit from)
Income Tax Differences
Statutory depletion	(20,875)	563.7%	(19,608)	16.3%	(18,931)	12.3%
State and local income taxes, net of federal
income tax benefit	(3,641)	98.3%	(2,076)	1.7%	(6,445)	4.2%
Fair market value over tax basis of
charitable contributions	0	0.0%	(2,007)	1.7%	0	0.0%
Undistributed foreign earnings	0	0.0%	0	0.0%	(2,553)	1.7%
Prior year true-up adjustments	1,883	-50.9%	(657)	0.5%	3,115	-2.1%
Other, net	(530)	14.4%	2	0.0%	140	-0.1%
Total income tax benefit/Effective tax rate	$ (24,459)	660.5%	$ (66,492)	55.2%	$ (78,483)	51.0%

Deferred taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax liability at December 31 are as follows:



in thousands	2013	2012
Deferred Tax Assets Related to
Pensions	$ 24,185	$ 84,869
Other postretirement benefits	35,752	44,030
Asset retirement obligations and
environmental remediation accruals	41,725	40,202
Accounts receivable, principally allowance
for doubtful accounts	1,279	1,910
Deferred compensation, vacation pay
and incentives	108,147	102,048
Interest rate swaps	17,371	19,585
Self-insurance reserves	18,338	18,165
Inventory	8,866	8,011
Federal net operating loss carryforwards	65,420	57,679
State net operating loss carryforwards	53,946	45,929
Valuation allowance on state net operating
loss carryforwards	(46,280)	(38,837)
Foreign tax credit carryforwards	22,410	22,409
Alternative minimum tax credit carryforwards	16,489	15,711
Charitable contribution carryforwards	10,814	9,953
Other	14,775	20,561
Total deferred tax assets	$ 393,237	$ 452,225
Deferred Tax Liabilities Related to
Fixed assets	$ 725,162	$ 754,697
Intangible assets	304,972	295,429
Other	23,755	18,770
Total deferred tax liabilities	$ 1,053,889	$ 1,068,896
Net deferred tax liability	$ 660,652	$ 616,671

The above amounts are reflected in the accompanying Consolidated Balance Sheets as of December 31 as follows:



in thousands	2013	2012
Deferred Income Taxes
Current assets	$ (40,423)	$ (40,696)
Noncurrent liabilities	701,075	657,367
Net deferred tax liability	$ 660,652	$ 616,671

On an annual basis, we perform a comprehensive analysis of all forms of positive and negative evidence to determine whether realizability of our deferred tax assets is more likely than not. During each interim period, we update our annual analysis for significant changes in the positive and negative evidence.

As of December 31, 2013, income tax receivables of $1,073,000 are included in accounts and notes receivable in the accompanying Consolidated Balance Sheet. These receivables relate to prior year state overpayments that we have requested to be refunded. There were similar receivables of $1,500,000 as of December 31, 2012.

Unrecognized tax benefits are discussed in our accounting policy for income taxes (see Note 1, caption Income Taxes). Changes in unrecognized tax benefits for the years ended December 31, are as follows:



in thousands	2013	2012	2011
Unrecognized tax benefits as of January 1	$ 13,550	$ 13,488	$ 28,075
Increases for tax positions related to
Prior years	28	0	389
Current year	845	1,356	913
Decreases for tax positions related to
Prior years	(86)	(43)	(411)
Settlements with taxing authorities	(136)	(1,456)	(15,402)
Expiration of applicable statute of limitations	(2,046)	205	(76)
Unrecognized tax benefits as of December 31	$ 12,155	$ 13,550	$ 13,488

We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense. Interest and penalties recognized as income tax expense (benefit) were $(788,000) in 2013, $218,000 in 2012 and $492,000 in 2011. The balance of accrued interest and penalties included in our liability for unrecognized tax benefits as of December 31 was $2,032,000 in 2013, $2,820,000 in 2012 and $2,602,000 in 2011.

Our unrecognized tax benefits at December 31 in the table above include $7,910,000 in 2013, $9,170,000 in 2012 and $9,205,000 in 2011 that would affect the effective tax rate if recognized.

We are routinely examined by various taxing authorities. By mutual agreement between Vulcan and the IRS, we have extended the statutes of limitations for the examinations of our 2008, 2009 and 2010 federal income tax returns to December 31, 2014. We anticipate no single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date.

We file income tax returns in U.S. federal, various state and foreign jurisdictions. Generally, we are not subject to significant changes in income taxes by any taxing jurisdiction for the years prior to 2008.

As of December 31, 2011, we did not recognize deferred income taxes on $56,000,000 of accumulated undistributed earnings from one of our foreign subsidiaries. At that time, we considered such earnings to be indefinitely reinvested. If we were to distribute these earnings in the form of dividends, the distribution would be subject to U.S. income taxes resulting in $19,600,000 of previously unrecognized deferred income taxes. On January 1, 2012, we removed our indefinite reinvestment assertion on future earnings of this foreign subsidiary and began to record deferred income taxes on those earnings.