14. Income Taxes

The provision for income tax expense (benefit) for the years ended December 31, 2012, 2011, and 2010 consist of the following:


	2012		2011			2010
Current:
Federal	$	34	$	(2,091	)		(134	)
State		118		(70	)		275

Total		152		(2,161	)		141
Deferred:
Federal		196		(52,450	)		(18,084	)
State		39		(1,047	)		(5,906	)

Total		235		(53,497	)		(23,990	)

Total provision (benefit) for income taxes	$	387	$	(55,658	)		(23,849	)

Total income tax expense (benefit) for the years ended December 31, 2012, 2011, and 2010 was allocated in the consolidated financial statements as follows:


	2012		2011			2010
Income tax (benefit) expense	$	387	$	(55,658	)	$	(23,849	)
Tax benefits recorded on Consolidated Statement of Changes in Equity:
Excess tax expense on stock compensation		—		907			362
Deferred tax expense on accumulated other comprehensive income		—		7,888			1,335

Total		—		8,795			1,697
Total income tax expense (benefit)	$	387	$	(46,863	)	$	(22,152	)

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:


	2012			2011			2010
Tax at the statutory federal rate	$	2,240		$	(135,078	)	$	(20,899	)
State income taxes (net of federal benefit)		224			(13,508	)		(2,090	)
(Decrease) increase in valuation allowance		(2,870	)		94,505			28
Medicare subsidy		—			(64	)		623
Real estate investment trust income exclusion		—			(1,468	)		(1,357	)
Other		793			(45	)		(154	)

Total income tax (benefit) expense	$	387		$	(55,658	)	$	(23,849	)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of December 31, 2012 and 2011 are presented below:


	2012			2011
Deferred tax assets:
Federal net operating carryforward	$	29,222		$	32,201
State net operating loss carryforward		20,888			21,442
Impairment losses		146,358			147,467
Deferred compensation		1,118			1,092
Capitalized real estate taxes		8,124			7,781
Prepaid income on land sales		10,262			10,536
Other		3,397			4,229

Total gross deferred tax assets		219,369			224,748
Valuation allowance		(92,599	)		(95,469	)

Total net deferred tax assets		126,770			129,279
Deferred tax liabilities:
Deferred gain on land sales and involuntary conversions		32,255			32,726
Prepaid pension asset		16,173			17,291
Installment sale		58,138			58,861
Depreciation		4,172			4,639
Other		4,075			4,047

Total gross deferred tax liabilities		114,813			117,564

Net deferred tax asset	$	11,957		$	11,715

At December 31, 2012 and 2011, the Company had a federal net operating loss carryforward of approximately $83.5 million and $92.0 million and a state net operating loss carry forward of $596.8 million and $612.6 million, respectively. These 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. Based on the timing of reversal of future taxable amounts and the Company’s recent history of losses and future expectations of reporting taxable losses, management does not believe it met the requirements to realize the benefits of certain of its deferred tax assets and has provided for a valuation allowance of $92.6 million and $95.5 million at December 31, 2012 and 2011, respectively. Included in other deferred tax assets at December 31, 2012 and 2011 is a deferred tax asset recognized in Accumulated other comprehensive income and an offsetting valuation allowance of $3.0 million and $3.8 million, respectively.

At December 31, 2012 and 2011, the Company had a valuation allowance of $9.6 million and $10.4 million, respectively related to state net operating losses and charitable contribution carry forwards.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	2012		2011
Balance at beginning of year	$	1,722	$	1,401
Decreases related to prior year tax positions		—		(1,401	)
Increased related to current year tax positions		—		1,722

Balance at December 31,	$	1,722	$	1,722

The Company had approximately $1.7 million of total unrecognized tax benefits as of December 31, 2012 and 2011, 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 penalties required to be accrued at December 31, 2012 or 2011. The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

The IRS completed the examination of the Company’s tax returns for 2007, 2008 and 2009 without adjustment. The Company does not currently anticipate that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months for any additional items.