INCOME TAXES

Through December 31, 2014, CREC was a taxable entity and its consolidated benefit (provision) for income taxes from operations for the years ended December 31, 2014, 2013, and 2012 was as follows (in thousands):



	2014		2013		2012
Current tax benefit (provision):
Federal	$	—	$	—	$	—
State	20		23		(91		)
	20		23		(91		)
Deferred tax benefit (provision):
Federal	—		—		—
State	—		—		—
	—		—		—
Benefit (provision) for income taxes from operations	$	20	$	23	$	(91	)

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, 2014, 2013 and 2012 as follows ($ in thousands):



	2014					2013					2012
	Amount			Rate		Amount			Rate		Amount			Rate
Federal income tax benefit (expense)	$	(1,124	)	(35	)%	$	(1,287	)	(35	)%	$	(4,368	)	(35	)%
State income tax benefit (expense), net of federal income tax effect	(125		)	(4	)%	(147		)	(4	)%	(91		)	—	%
Valuation allowance	1,644			50	%	(361		)	(10	)%	7,055			57	%
State deferred tax adjustment	(375		)	(11	)%	1,818			49	%	(2,687		)	(22	)%
Other	—			—	%	—			—	%	—			—	%
Benefit (provision) applicable to income (loss) from continuing operations	$	20		—	%	$	23		—	%	$	(91	)	—	%

On December 31, 2014, CREC merged into Cousins and Cousins contributed some of the assets and contracts that were previously owned by CREC to Cousins TRS Services LLC ("CTRS"), a newly formed taxable REIT subsidiary of Cousins. Cousins retained many of CREC's tax benefits, including the significant portion of CREC's Federal and state tax carryforwards. Some of CREC's tax benefits were assumed by CTRS upon the contributions Cousins made to CTRS immediately following CREC's merger into Cousins. The deferred tax assets as of December 31, 2014 included in the table below include only those of CTRS. The deferred tax assets in the table below as of December 31, 2013 include those of CREC. The tax effect of significant temporary differences representing deferred tax assets and liabilities of CTRS and CREC, as applicable, as of December 31, 2014 and 2013 are as follows (in thousands):



	2014			2013
Income from unconsolidated joint ventures	$	2,441		$	7,361
Land	—			6,116
Long-term incentive equity awards	—			2,089
Interest carryforward	—			13,158
Federal and state tax carryforwards	—			50,253
Other	—			364
Total deferred tax assets	2,441			79,341
Valuation allowance	(2,441		)	(79,341		)
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.

As of December 31, 2014 the deferred tax asset of CTRS equaled $2.4 million and as of December 31, 2013 the deferred tax asset of CREC equaled $79.3 million with a valuation allowance placed against the full amount of each. The conclusion that a valuation allowance should be recorded as of December 31, 2014 was based the lack of evidence that CTRS, as a newly formed entity, could generate future taxable income to realize the benefit of the deferred tax assets. A valuation allowance was recorded as of December 31, 2013 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.