Income Taxes

Income tax expense (benefit) for the years ended December 31, 2015, 2014, and 2013 consist of the following:



	2015			2014		2013
Current:
Federal	$	(1,377	)	$	69,245	$	349
State	(138		)	135		169
Total	(1,515		)	69,380		518
Deferred:
Federal	2,261			35,314		(366		)
State	62			10,813		(561		)
Total	2,323			46,127		(927		)
Income tax expense (benefit)	$	808		$	115,507	$	(409	)

Total income tax expense (benefit) for the years ended December 31, 2015, 2014, and 2013 was allocated in the consolidated financial statements as follows:



	2015		2014		2013
Income tax expense (benefit)	$	808	$	115,507	$	(409	)
Income tax recorded in Accumulated other comprehensive income
Income tax benefit	300		127		—
Total income tax expense (benefit)	$	508	$	115,380	$	(409	)

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:



	2015			2014			2013
Tax at the statutory federal rate	$	(323	)	$	182,700		$	1,603
State income taxes (net of federal benefit)	(32		)	18,270			160
Decrease in valuation allowance	(164		)	(86,882		)	(2,218		)
Fees and expenses for SEC investigation	1,092			—			—
Other	235			1,419			46
Total income tax expense (benefit)	$	808		$	115,507		$	(409	)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 31, 2015 and 2014 are presented below:



	2015			2014
Deferred tax assets:
State net operating loss carryforwards	$	11,400		$	11,336
Impairment losses	112,143			116,451
Prepaid income from land sales	5,490			5,507
Other	1,358			1,398
Total gross deferred tax assets	130,391			134,692
Valuation allowance	(6,012		)	(6,176		)
Total net deferred tax assets	124,379			128,516
Deferred tax liabilities:
Investment in real estate and property and equipment basis differences	3,071			2,484
Deferred gain on land sales and involuntary conversions	28,691			31,574
Installment sales	126,741			126,225
Pension Plan assets transferred to the 401(k) Plan	2,723			3,057
Total gross deferred tax liabilities	161,226			163,340
Net deferred tax liability	$	(36,847	)	$	(34,824	)

The Company had no federal net operating loss carryforwards at December 31, 2015 and 2014. At December 31, 2015 and 2014, the Company had state net operating loss carryforwards of $325.7 million and $323.9 million, respectively. The majority of state net operating losses are available to offset future taxable income through 2031.

In general, 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, 2015, 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 $6.0 million.

As of December 31, 2015 and 2014, 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 $6.0 million and $6.2 million, respectively, related to state net operating losses. During 2015, the Company decreased the valuation allowance by $0.2 million to $6.0 million.

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, 2015 and 2014, 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, 2015 and 2014.

There were no penalties required to be accrued at December 31, 2015 and 2014. The Company recognizes interest and/or penalties related to income tax matters in Income tax (expense) benefit.

The Company is currently open to examination by taxing authorities for the years ended December 31, 2012 through 2014. The IRS has completed the examination of the Company’s tax return for 2013 without adjustment.