INCOME TAXES

The following table details the allocation of the Company's provision (benefit) for income taxes from continuing operations between RAI and RSO:



	Years Ended December 31,
	2013			2012		2011
RAI	$	1,657		$	13,117	(3,811		)
RSO, net of eliminations	(1,041		)	14,602		12,036
Total	$	616		$	27,719	$	8,225

The following table details the components of the Company's provision (benefit) for income taxes from continuing operations excluding RSO (in thousands):



	Years Ended December 31,
	2013			2012			2011
Current tax provision:
Federal	$	746		$	—		$	(29	)
State	1,042			1,225			(328		)
Foreign	(156		)	56			(243		)
Total current tax provision (benefit)	1,632			1,281			(600		)
Deferred tax provision (benefit)
Federal	1,399			13,045			(2,650		)
State	(1,374		)	(1,209		)	(1,167		)
Foreign	—			—			606
Total deferred tax provision (benefit)	25			11,836			(3,211		)
Total income tax provision (benefit)	$	1,657		$	13,117		$	(3,811	)

A reconciliation between the federal statutory income tax rate and the Company's effective income tax rate excluding RSO is as follows:



	Years Ended December 31,
	2013		2012		2011
Statutory tax rate	35	%	35	%	35	%
State and local taxes, net of federal benefit	(10	)	3		9
Deconsolidation adjustment	—		(6	)	—
Return permanent adjustments	—		—		15
Foreign adjustment	(2	)	—		(5	)
Valuation allowance for deferred tax assets	—		3		—
Equity-based compensation expense (benefit)	1		—		(4	)
Dividend received deduction	(2	)	—		—
Other items	(5	)	—		2
	17	%	35	%	52	%

Deferred tax assets (liabilities) are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences will result in taxable or deductible amounts in future years. The components of deferred tax assets, net, excluding RSO are as follows (in thousands):



	December 31,
	2013			2012
Deferred tax assets related to:
Federal, foreign, state and local operating loss carryforwards	$	8,999		$	22,384
Capital loss carryforwards	450			1,316
Unrealized loss on investments	3,664			2,743
Investment in partnerships	2,572			—
Provision for credit losses	15,600			13,295
Accrued expenses	2,142			1,848
Employee equity compensation awards	1,005			814
Investments in real estate assets	—			136
Property and equipment basis differences	96			—
Gross deferred tax assets	34,528			42,536
Less: valuation allowance	(4,584		)	(6,350		)
	29,944			36,186
Deferred tax liabilities related to:
Investments in partnership interests	—			(5,481		)
Deferred income	(2,175		)	(2,343		)
Property and equipment basis differences	—			(88		)
	(2,175		)	(7,912		)

Deferred tax assets, net	$	27,769		$	28,274

As a result of certain realization requirements, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2013 and 2012 that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting. Equity will be increased by $1.6 million if and when such deferred tax assets are ultimately realized. The Company uses a "with and without approach" when determining when excess tax benefits have been realized.

At December 31, 2013, the Company had state, local and foreign net operating tax loss carryforwards ("NOLs") of $150.6 million (deferred tax asset of $9.1 million) that will expire between 2014 and 2034. The Company believes it will be able to utilize up to $88.7 million of these NOLs (tax effected benefit of $5.3 million) prior to their expiration and has changed its valuation allowance against gross NOLs from $93.2 million to $61.9 million (tax effected benefit of $1.3 million). In addition, the Company changed its valuation allowance against gross state timing differences from $2.4 million to $1.7 million (tax effected benefit of $440,000) that the Company believes it will not be able to use. Management will continue to assess its estimate of the amount of NOLs that the Company will be able to utilize. Furthermore, its estimate of the required valuation allowance could be adjusted in the future if projections of taxable income are revised. Management believes it is more likely than not that the other net deferred tax assets will be realized based on tax planning strategies that will generate future taxable income during the periods in which these temporary differences become deductible.

The Company is subject to examination by the U.S. Internal Revenue Service (“IRS”) and by the taxing authorities in states in which the Company has significant business operations, such as Pennsylvania and New York. The Company is currently undergoing an IRS examination for years 2012 and 2011. The Company is also currently undergoing a New York State examination for fiscal years 2007 through 2009. The Company is not subject to IRS examination for years before 2010 and is not subject to state and local income tax examinations for years before 2007.