Income Taxes

The (benefit) provision for income taxes from continuing operations consists of the following (in thousands):



	Year Ended December 31,
	2011			2010		2009
Current:
Federal	$	4,115		$	363	$	3,148
State	2,936			1,870		782
	7,051			2,233		3,930
Deferred:
Federal	(125,261		)	47,709		20,885
State	(24,018		)	4,026		(4,151		)
	(149,279		)	51,735		16,734
Total	$	(142,228	)	$	53,968	$	20,664

The components of the net deferred income tax liabilities consist of the following:



(in thousands)	Year Ended December 31,
	2011			2010
Deferred income tax assets:
Federal benefit of state income taxes	$	(2,479	)	$	6,862
Credit carryforwards	28,783			28,808
Equity and deferred compensation	12,620			11,229
Derivatives	8,669			26,838
Net operating loss	412			14,545
Other, net	29			1,293
	48,034			89,575
Deferred income tax liabilities:
Depreciation and depletion	(219,705		)	(386,440		)
	(219,705		)	(386,440		)

Net deferred income tax liabilities	$	(171,671	)	$	(296,865	)

At December 31, 2011, the Company's net deferred income tax assets and liabilities were recorded as a current asset of $13.8 million and a long-term liability of $185.5 million. At December 31, 2010, the Company's net deferred income tax assets and liabilities were recorded as a current asset of $32.3 million and a long-term liability of $329.2 million.

Reconciliation of the statutory federal income tax rate to the Company's effective income tax rate follows:



	Year Ended December 31,
	2011		2010		2009
Income tax computed at statutory federal rate	35	%	35	%	35	%
State income taxes, net of federal benefit	3		4		4
Deferred state rate impact	—		(1	)	(5	)
Net impact to uncertain income tax positions	1		—		(2	)
Other	(1	)	2		(2	)
Effective income tax rate	38	%	40	%	30	%

As of December 31, 2011, the Company had approximately $11.1 million of federal and $13.5 million of state (California) EOR tax credit carryforwards available to reduce future income taxes. The EOR credits will begin to expire, if unused, in 2025 and 2016 for federal and California purposes, respectively. The Company has federal alternative minimum income tax (AMT) credit carryforwards of $0.8 million and California AMT credits of $0.7 million that do not expire and can be used to offset regular income taxes in future years to the extent that regular income taxes exceed the AMT in any such year. The Company also has Colorado enterprise zone income tax credits of $2.5 million that will begin to expire in 2018 if not used.

In 2011, the Company executed a final audit settlement that reduced unrecognized income tax benefits by $2.3 million, which resulted in a reduction of the effective income tax rate. As of December 31, 2011, the Company had a gross liability for uncertain income tax benefits of $2.9 million which, if recognized, would affect the effective income tax rate. The Company estimates that it is reasonably possible that the balance of unrecognized income tax benefits as of December 31, 2011 could decrease by a maximum of $2.7 million in the next 12 months due to the expiration of statutes of limitations. The Company recognizes potential accrued interest and penalties related to unrecognized income tax benefits in income tax expense, which is consistent with the recognition of these items in prior reporting periods. The Company had accrued approximately $0.8 million of interest related to its uncertain income tax positions as of December 31, 2011 and 2010.

The Company recognized a net benefit of $2.3 million, $0.0 million and $3.6 million due to the closure of certain federal and state income tax years, offset by additional uncertain income tax position accruals net of interest expense of $0.5 million, $0.1 million and $0.8 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The following table illustrates changes in the gross unrecognized income tax benefits:



(in millions)	Year Ended December 31,
	2011			2010			2009
Unrecognized income tax benefits at January 1	$	5.2		$	6.1		$	12.0
Decreases for positions taken in current year	—			—			(0.1		)
Decreases for positions taken in a prior year	—			(0.8		)	(1.3		)
Decreases for settlements with taxing authorities	(2.3		)	—			(3.6		)
Decreases for lapses in the applicable statute of limitations	—			(0.1		)	(0.9		)
Unrecognized income tax benefits at December 31	$	2.9		$	5.2		$	6.1

As of December 31, 2011, the Company remains subject to examination in the following major tax jurisdictions for the tax years indicated below:



Jurisdiction:	Tax Years Subject to Exam:
Federal	2007 - 2010
California	2007 - 2010
Colorado	2007 - 2010
Texas	2007 - 2010
Utah	2008 - 2010