

12.	Income Taxes

The provision for income taxes is comprised of the following (in thousands):



	For the Years Ended December 31,
	2012			2011		2010
Federal:
Current	$	51,342		$	45,765	$	51,717
Deferred	(27,103		)	17,330		11,536
	24,239			63,095		63,253
State:
Current	9,896			10,710		12,892
Deferred	(5,081		)	2,222		1,957
	4,815			12,932		14,849
Foreign:
Current	4,035			—		—
Deferred	(1,214		)	—		—
	2,821			—		—
	$	31,875		$	76,027	$	78,102

The net deferred income tax assets (liabilities) at December 31, 2012 and 2011 are comprised of the following (in thousands):



	December 31,
	2012				2011
Current deferred income tax assets:
Accounts receivable	$	6,085			$	5,362
State taxes	2,471				4,469
Other liabilities and reserves	9,716				8,112
Other assets	7,119				7,046
Inventory	1,275			1,321	1,321
Valuation allowance	(4,087		)		—
Total current deferred income tax assets	$	22,579			$	26,310
Non-current deferred income tax (liabilities) assets:
Net operating loss carryforwards	$	29,805			$	29,362
Write-down of assets	1,222				1,222
Start-up costs	335				335
Other assets	24,955				31,306
Intangible assets	(107,112		)		(128,947		)
Property and equipment	(22,649		)		(27,131		)
Unrealized loss on investments	—				1,961
Share-based compensation	7,377				6,416
Valuation allowance	(9,779		)		(15,753		)
Total non-current deferred income tax liabilities, net	$	(75,846	)		$	(101,229	)

VCA Antech, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)



12.	Income Taxes, continued

At December 31, 2012, we had Federal net operating loss (“NOL”) carryforwards of approximately $73.0 million, comprised mainly of acquired NOL carryforwards. These NOLs expire at various dates through 2032. The utilization of NOL carryforwards to reduce taxable income is subject to certain statutory limitations. Events that cause such a limitation include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. We believe that some of our acquisitions caused such a change of ownership and, accordingly, utilization of the NOL carryforwards may be limited in future years. Accordingly, the valuation allowance is principally related to subsidiaries’ NOL carryforwards. The change in valuation allowance in 2012 is related to investment-related loss carryforwards which expired in 2012. We believe that it is more likely than not that the benefit from the remaining net deferred tax assets will be realizable.

Our effective tax rate was 41.2%, 44.3% and 41.5% in 2012, 2011 and 2010, respectively.

A reconciliation of the provision for income taxes to the amount computed at the Federal statutory rate is as follows:



	For Years Ended December 31,
	2012		2011		2010
Federal income tax at statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of Federal benefit	4.1		4.9		6.0
Goodwill impairment	4.6		4.3		—
AVC gain	(2.6	)	—		—
Foreign rate differential	(1.1	)	—		—
Miscellaneous	1.2		0.1		0.5
	41.2	%	44.3	%	41.5	%

The provision for 2010 income taxes includes tax expense of $3.5 million, related to additional state tax payments on a tax settlement.

We are regularly audited by federal and state tax authorities. Our 2011, 2010 and 2009 taxable years are currently open for IRS audit. The previous four years are generally open for state audit.