NOTE 9: INCOME TAXES

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



in thousands	2015	2014	2013
Earnings (Loss) from Continuing
Operations before Income Taxes
Domestic	$ 293,547	$ 264,473	$ (34,239)
Foreign	34,310	34,365	30,536
Total	$ 327,857	$ 298,838	$ (3,703)

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



in thousands	2015	2014	2013
Provision for (Benefit from) Income Taxes
from Continuing Operations
Current
Federal	$ 67,521	$ 47,882	$ (3,691)
State and local	14,035	18,983	7,941
Foreign	7,784	7,174	5,423
Total	$ 89,340	$ 74,039	$ 9,673
Deferred
Federal	$ 11,192	$ 13,556	$ (20,581)
State and local	(4,888)	4,120	(13,542)
Foreign	(701)	(23)	(9)
Total	$ 5,603	$ 17,653	$ (34,132)
Total provision (benefit)	$ 94,943	$ 91,692	$ (24,459)

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



dollars in thousands		2015		2014		2013
Income tax provision (benefit) at the
federal statutory tax rate of 35%	$ 114,750	35.0%	$ 104,594	35.0%	$ (1,296)	35.0%
Provision for (Benefit from)
Income Tax Differences
Statutory depletion	(27,702)	-8.4%	(25,774)	-8.6%	(20,875)	563.7%
State and local income taxes, net of federal
income tax benefit	5,945	1.8%	15,017	5.0%	(3,641)	98.3%
U.S. production deduction	(5,099)	-1.6%	0	0.0%	0	0.0%
Foreign tax credit carryforwards impairment	6,486	2.0%	0	0.0%	0	0.0%
Permanently reinvested foreign earnings	(6,396)	-2.0%	0	0.0%	0	0.0%
Other, net	6,959	2.2%	(2,145)	-0.7%	1,353	-36.5%
Total income tax provision (benefit)/
Effective tax rate	$ 94,943	29.0%	$ 91,692	30.7%	$ (24,459)	660.5%

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	2015	2014
Deferred Tax Assets Related to
Employee benefits	$ 78,999	$ 97,757
Asset retirement obligations & other reserves	59,507	53,670
Deferred compensation	117,298	121,900
State net operating losses	61,658	59,315
Federal credit carryforwards	34,340	40,212
Other	48,856	52,241
Total gross deferred tax assets	400,658	425,095
Valuation allowance	(59,323)	(56,867)
Total net deferred tax assets	$ 341,335	$ 368,228
Deferred Tax Liabilities Related to
Property, plant and equipment	$ 665,057	$ 661,697
Goodwill/other intangible assets	324,910	329,539
Other	32,464	28,403
Total deferred tax liabilities	$ 1,022,431	$ 1,019,639
Net deferred tax liability	$ 681,096	$ 651,411

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



in thousands	2015	2014
Deferred Income Taxes
Current assets 1	$ 0	$ (39,726)
Noncurrent liabilities	681,096	691,137
Net deferred tax liability	$ 681,096	$ 651,411


1	As discussed in Note 1, we early adopted ASU 2015-17 on a prospective basis as of December 31, 2015. Thus, all deferred income taxes as of December 31, 2015 are classified as noncurrent resulting in a $44,464 thousand decrease in current assets with a corresponding decrease in noncurrent liabilities.

As noted above, we have state net operating loss carryforward deferred tax assets of $61,658,000 of which $58,921,000 relates to Alabama. The Alabama net operating loss carryforward, if not utilized, would expire in years 2022 – 2029. Prior to 2015, this Alabama deferred tax asset carried a full valuation allowance. During 2015, we restructured our legal entities which resulted in a partial release of the valuation allowance in the amount of $4,655,000.

Each quarter we analyze the likelihood that our deferred tax assets will be realized. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized.

As of December 31, 2015, income tax receivables of $4,138,000 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 $1,040,000 as of December 31, 2014.

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



in thousands	2015	2014	2013
Unrecognized tax benefits as of January 1	$ 7,057	$ 12,155	$ 13,550
Increases for tax positions related to
Prior years	491	229	28
Current year	942	528	845
Decreases for tax positions related to
Prior years	0	(53)	(86)
Settlements with taxing authorities	0	0	(136)
Expiration of applicable statute of limitations	(43)	(5,802)	(2,046)
Unrecognized tax benefits as of December 31	$ 8,447	$ 7,057	$ 12,155

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 $138,000 in 2015, $(1,067,000) in 2014 and $(788,000) in 2013. The balance of accrued interest and penalties included in our liability for unrecognized tax benefits as of December 31 was $1,103,000 in 2015, $965,000 in 2014 and $2,032,000 in 2013.

Our liability for unrecognized tax benefits at December 31 in the table above include $7,614,000 in 2015, $6,282,000 in 2014 and $7,910,000 in 2013 that would affect the effective tax rate if recognized.

We are routinely examined by various taxing authorities. 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 2012.

As of December 31, 2015, we have $75,938,000 of accumulated undistributed earnings from one of our foreign subsidiaries. We consider these earnings to be indefinitely reinvested and, therefore, have not recorded income taxes on these earnings. If we were to distribute these earnings in the form of dividends, the distribution would result in U.S. income taxes of $26,578,000.