INCOME TAXES

CREC is a taxable entity and its consolidated benefit (provision) for income taxes from operations for the years ended December 31, 2012, 2011 and 2010 is as follows (in thousands):



	2012			2011		2010
Current tax benefit (provision):
Federal	$	—		$	—	$	720
State	(91		)	186		359
	(91		)	186		1,079
Deferred tax benefit (provision):
Federal	—			—		—
State	—			—		—
	—			—		—
Benefit (provision) for income taxes from operations	$	(91	)	$	186	$	1,079

The net income tax benefit (provision) differs from the amount computed by applying the statutory federal income tax rate to CREC’s income before taxes for the years ended December 31, 2012, 2011 and 2010 as follows ($ in thousands):



	2012					2011					2010
	Amount			Rate		Amount			Rate		Amount			Rate
Federal income tax benefit (expense)	$	(4,368	)	(35	)%	$	35,112		35	%	$	1,832		35	%
State income tax benefit (expense), net of federal income tax effect	(91		)	—	%	121			—	%	141			3	%
Valuation allowance	7,055			57	%	(34,191		)	(34	)%	(894		)	(17	)%
State deferred tax adjustment	(2,687		)	(22	)%	—			—		—			—
Other	—			—	%	(856		)	(1	)%	—			—
Benefit (provision) applicable to income (loss) from continuing operations	$	(91	)	—	%	$	186		—	%	$	1,079		21	%

The tax effect of significant temporary differences representing CREC’s deferred tax assets and liabilities as of December 31, 2012 and 2011 are as follows (in thousands):



	2012			2011
Income from unconsolidated joint ventures	$	7,846		$	26,009
Land	11,219			20,248
Long-term incentive equity awards	2,126			1,608
For-sale multi-family units basis differential	233			269
Interest carryforward	13,158			13,158
Federal and state tax carryforwards	44,075			23,883
Other	323			860
Total deferred tax assets	78,980			86,035
Valuation allowance	(78,980		)	(86,035		)
Net deferred tax asset	$	—		$	—

A valuation allowance is required to be recorded against deferred tax assets if, based on the available evidence, it is more likely than not that such assets will not be realized. When assessing the need for a valuation allowance, appropriate consideration should be given to all positive and negative evidence related to this realization. This evidence includes, among other things, the existence of current and recent cumulative losses, forecasts of future profitability, the length of statutory carryforward periods, the Company’s history with loss carryforwards and available tax planning strategies.

In 2012 and 2011, the deferred tax asset of the Company’s taxable REIT subsidiary, CREC, equaled $79.0 million and $86.0 million, respectively, with a valuation allowance placed against the full amount. The conclusion that a valuation allowance should be recorded was based on losses at CREC in current and recent years, and the inability of the Company to predict, with any degree of certainty, when CREC would generate income in the future in amounts sufficient to utilize the deferred tax asset.

As of December 31, 2012, the Company’s federal and state combined net operating loss (“NOL”) carryforwards are $197.7 million, which will expire between 2023 and 2031, if unused. In addition, the Company has Alternative Minimum Tax (“AMT”) credit carryforwards of $63,000 which do not expire. On an after-tax basis, the Company’s federal and state NOL carryforwards and AMT credit carryforwards result in a deferred tax asset of $44.1 million.

The Company has interest carryforwards related to interest deductions of approximately $33.7 million as of both December 31, 2012 and 2011. The Company recorded deferred tax assets of $13.2 million as of both December 31, 2012 and 2011, reflecting the benefit of the interest carryforwards. Although such deferred tax assets do not expire, realization is dependent upon generating sufficient taxable income in the future.