Income taxes

The provision (benefit) for income taxes consists of the following:



In thousands of dollars
2014	Current		Deferred			Total
Federal	$	217,500	$	(38,000	)	$	179,500
State and other	5,800		37,200			43,000
Foreign	1,100		2,000			3,100
Total	$	224,400	$	1,200		$	225,600



In thousands of dollars
2013	Current			Deferred		Total
Federal	$	95,000		$	39,400	$	134,400
State and other	(36,700		)	8,000		(28,700		)
Foreign	1,000			6,500		7,500
Total	$	59,300		$	53,900	$	113,200



In thousands of dollars
2012	Current			Deferred			Total
Federal	$	82,200		$	106,000		$	188,200
State and other	(2,600		)	17,100			14,500
Foreign	(6,900		)	(400		)	(7,300		)
Total	$	72,700		$	122,700		$	195,400

The components of net income attributable to Gannett Co., Inc. before income taxes consist of the following:



In thousands of dollars
	2014		2013		2012
Domestic	$	1,207,669	$	426,162	$	538,988
Foreign	80,102		75,718		80,692
Total	$	1,287,771	$	501,880	$	619,680

The provision for income taxes on varies from the U.S. federal statutory tax rate as a result of the following differences:



	2014		2013		2012
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in taxes resulting from:
Non-deductible goodwill impairment	1.2		—		5.2
State/other income taxes net of federal income tax	3.6		2.7		2.2
Statutory rate differential and permanent differences in earnings in foreign jurisdictions	(2.0	)	(5.7	)	(5.6	)
Audit resolutions	(0.1	)	(7.9	)	(4.6	)
Loss on sale of subsidiary	(19.0	)	—		—
Lapse of statutes of limitations net of federal income tax	(0.5	)	(2.6	)	(1.8	)
Domestic manufacturing deduction	(1.7	)	(2.1	)	(1.7	)
Other, net	1.0		3.2		2.8
Effective tax rate	17.5	%	22.6	%	31.5	%

Absent the impact of facility consolidation, asset impairment, certain gains and expenses recognized in non-operating categories and workforce restructuring charges, the special net tax benefit from the release of certain tax reserves due to audit settlements, and the lapse of statutes of limitations, all for the years from 2012 to 2014, as well as the special net tax benefit from the sale of a non-strategic subsidiary in 2014, our effective tax rate would have been 30.9% for 2014, 29.7% for 2013, and 30.9% for 2012.

Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for enacted changes in tax laws or tax rates of the various tax jurisdictions. The amounts of such adjustments for 2014, 2013 and 2012 were not significant.

Deferred tax liabilities and assets were composed of the following at the end of 2014 and 2013:



In thousands of dollars
	Dec. 28, 2014			Dec. 29, 2013
Liabilities
Accelerated depreciation	$	262,657		$	302,650
Accelerated amortization of deductible intangibles	589,014			678,744
Partnership investments including impairments	244,582			—
Other	18,961			24,882
Total deferred tax liabilities	1,115,214			1,006,276
Assets
Accrued compensation costs	64,255			75,492
Pension	343,566			219,413
Postretirement medical and life	37,794			55,921
Federal tax benefits of uncertain state tax positions	12,135			12,474
Partnership investments including impairments	—			1,140
Loss carryforwards	361,133			74,018
Other	77,977			84,738
Total deferred tax assets	896,860			523,196
Valuation allowance	200,123			83,579
Total net deferred tax assets (liabilities)	$	(418,477	)	$	(566,659	)
Amounts recognized in Consolidated Balance Sheets
Current deferred tax assets	$	158,648		$	21,245
Assets held for sale	$	9,600		$	—
Noncurrent deferred tax assets	$	63,647		$	—
Noncurrent deferred tax liabilities	$	(650,372	)	$	(587,904	)

As of Dec. 28, 2014, we had approximately $728.8 million of capital loss carryforwards for federal and state purposes which, if not used prior to 2020, will expire, and can only be utilized to the extent capital gains are recognized. As of Dec. 28, 2014, we also had approximately $16.8 million of foreign tax credits, $1.8 million of state credits, $278.4 million of foreign net operating loss carryforwards, $489.0 million of apportioned state net operating loss carryovers, and $35.3 million of foreign capital loss carryforwards. The foreign tax credits expire in various amounts beginning in 2016 through 2024, the state credits expire between 2016 and 2023 in various amounts, and the state and foreign net operating loss carryovers expire in various amounts beginning in 2015 through 2034. The foreign capital losses can be carried forward indefinitely.

Included in total deferred tax assets are valuation allowances of approximately $200.1 million in 2014 and $83.6 million in 2013, primarily related to federal and state capital losses, foreign tax credits, foreign losses and state net operating losses available for carry forward to future years. The increase in the valuation allowance from 2013 to 2014 is related primarily to the $96.3 million valuation allowance with respect to additional federal and state capital loss carryforwards for which it was determined, based on an analysis of future sources of taxable income and other sources of positive and negative evidence, it is not more likely than not that the capital losses will be utilized before their expiration.

Realization of deferred tax assets for which valuation allowances have not been established is dependent upon generating sufficient future taxable income. We expect to realize the benefit of these deferred tax assets through future reversals of our deferred tax liabilities, through the recognition of taxable income in the allowable carryback and carryforward periods, and through implementation of future tax planning strategies. Although realization is not assured, we believe it is more likely than not that all deferred tax assets for which valuation allowances have not been established will be realized.

The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions:



In thousands of dollars
	Dec. 28, 2014			Dec. 29, 2013
Change in unrecognized tax benefits
Balance at beginning of year	$	57,324		$	86,180
Additions based on tax positions related to the current year	12,426			29,470
Additions for tax positions of prior years	868			4,710
Reductions for tax positions of prior years	(4,563		)	(33,109		)
Settlements	(129		)	(1,246		)
Reductions due to lapse of statutes of limitations	(7,040		)	(28,681		)
Balance at end of year	$	58,886		$	57,324

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $46.8 million as of Dec. 28, 2014, and $46.5 million as of Dec. 29, 2013. This amount includes the federal tax benefit of state tax deductions.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. We also recognize interest income attributable to overpayment of income taxes and from the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released as a component of income tax expense. We recognized income from interest and the release of penalty reserves of $4.6 million in 2014, $17.2 million in 2013, and $7.8 million in 2012. The amount of accrued interest and penalties payable related to unrecognized tax benefits was $6.9 million as of Dec. 28, 2014 and $11.5 million as of Dec. 29, 2013.

We file income tax returns in the U.S. and various state and foreign jurisdictions. The 2011 through 2014 tax years remain subject to examination by the IRS. The 2010 through 2014 tax years generally remain subject to examination by state authorities, and the tax year 2014 is subject to examination in the U.K. Tax years before 2010 remain subject to examination by certain states primarily due to the filing of amended tax returns as a result of the settlement of the IRS examination for these years and due to ongoing audits.

It is reasonably possible that the amount of unrecognized benefit with respect to certain of our unrecognized tax positions will significantly increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, we estimate the amount of our gross unrecognized tax positions may decrease by up to approximately $4.8 million within the next 12 months primarily due to lapses of statutes of limitations and settlement of ongoing audits in various jurisdictions.