Income Taxes

Income tax (expense) benefit for the years ended December 31, 2014, 2013, and 2012 consist of the following:



	2014		2013			2012
Current:
Federal	$	69,245	$	349		$	34
State	135		169			118
Total	69,380		518			152
Deferred:
Federal	35,314		(366		)	196
State	10,813		(561		)	39
Total	46,127		(927		)	235
Income tax expense (benefit)	$	115,507	$	(409	)	$	387

Total income tax expense (benefit) for the years ended December 31, 2014, 2013, and 2012 was allocated in the consolidated financial statements as follows:



	2014		2013			2012
Income tax expense (benefit)	$	115,507	$	(409	)	$	387
Income tax recorded in Accumulated other comprehensive income
Income tax benefit	127		—			—
Total income tax expense (benefit)	$	115,380	$	(409	)	$	387

Income tax expense (benefit) attributable to income from operations differed from the amount computed by applying the statutory federal income tax rate of 35% to pre-tax income as a result of the following:



	2014			2013			2012
Tax at the statutory federal rate	$	182,700		$	1,603		$	2,240
State income taxes (net of federal benefit)	18,270			160			224
Decrease in valuation allowance	(86,882		)	(2,218		)	(2,870		)
Other	1,419			46			793
Total income tax expense (benefit)	$	115,507		$	(409	)	$	387

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2013 are presented below:



	2014			2013
Deferred tax assets:
Federal net operating carryforwards	$	—		$	26,884
State net operating loss carryforwards	11,336			20,759
Impairment losses	116,451			151,050
Prepaid income from land sales	5,507			10,210
Other	1,398			4,697
Total gross deferred tax assets	134,692			213,600
Valuation allowance	(6,176		)	(93,058		)
Total net deferred tax assets	128,516			120,542
Deferred tax liabilities:
Investment in real estate and property and equipment basis differences	2,484			1,726
Deferred gain on land sales and involuntary conversions	31,574			31,385
Installment sale	126,225			58,969
Pension Plan assets transferred to the 401(k) Plan	3,057			—
Prepaid pension asset	—			15,596
Total gross deferred tax liabilities	163,340			107,676
Net deferred tax (liability) asset	$	(34,824	)	$	12,866

At December 31, 2013, the Company had federal net operating loss carryforwards of $76.8 million, which the Company utilized in 2014 and had no federal net operating loss carryforwards at December 31, 2014. At December 31, 2014 and 2013, the Company had state net operating loss carryforwards of $323.9 million and $593.1 million, respectively. The state net operating losses are available to offset future taxable income through 2031.

A valuation allowance is recorded if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from loss carryforwards. As of December 31, 2013, based on the timing of reversal of future taxable amounts and the Company’s history of losses, management did not believe it met the requirements to realize the benefits of certain of its deferred tax assets; therefore, the Company had maintained a valuation allowance of $93.1 million.

As a result of the deferred tax liability from the AgReserves Sale, the reversals of the deferred tax assets for the federal and state net operating loss carryforwards and the reversals of deferred tax assets for impairment losses, primarily from the RiverTown Sale, the Company had a net deferred tax liability of $34.8 million as of December 31, 2014, as compared to a net deferred tax asset of $12.9 million as of December 31, 2013. During 2014, the Company decreased the valuation allowance by $86.9 million to $6.2 million at December 31, 2014 from $93.1 million at December 31, 2013.

As of December 31, 2014 and 2013, management believed it had not met the requirements to realize the benefits for a portion of its deferred tax assets for state net operating loss carryforwards; therefore, the Company has maintained a valuation allowance of $6.2 million and $8.4 million, respectively, related to state net operating losses and charitable contribution carryforwards.

At December 31, 2013, other deferred tax assets includes a valuation allowance to offset the deferred tax component recognized in Accumulated other comprehensive loss of $2.1 million. This valuation allowance was reversed during 2014 and there was no valuation allowance in Accumulated other comprehensive loss as of December 31, 2014.

The Company had approximately $1.7 million of total unrecognized tax benefits as of December 31, 2014 and 2013, respectively. Of this total, there are no amounts of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. There were no decreases or increases related to prior year or current year tax positions. In addition, as a result of the adoption of the guidance that was effective for the Company on January 1, 2014 related to the presentation of an unrecognized tax benefit, when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists, the Company reclassified $1.7 million of its unrecognized tax benefit from Accrued liabilities and deferred credits to deferred tax liabilities as of December 31, 2014.

There were no penalties required to be accrued at December 31, 2014 and 2013. The Company recognizes interest and/or penalties related to income tax matters in income tax (expense) benefit.

The IRS completed the examination of the Company’s tax returns for 2011, 2009, 2008 and 2007 without adjustment.