Income Taxes

Income tax expense (benefit) is summarized as follows:



	Year Ended December 31,
(In thousands)	2015			2014			2013
Current
Federal	$	983		$	44,887		$	56,544
State	(1,397		)	(4,387		)	10,841
	(414		)	40,500			67,385
Deferred
Federal	(72,869		)	(32,375		)	111,147
State	(99		)	(80,192		)	27,233
	(72,968		)	(112,567		)	138,380
Income tax expense (benefit)	$	(73,382	)	$	(72,067	)	$	205,765

Income tax expense (benefit) was different than the amounts computed by applying the statutory federal income tax rate as follows:



	Year Ended December 31,
(In thousands)	2015			2014			2013
Statutory federal income tax rate	35		%	35		%	35		%
Computed "expected" federal income tax	$	(65,546	)	$	11,341		$	169,938
State income tax, net of federal income tax benefit	(3,152		)	903			17,513
Deferred tax adjustment related to change in overall state tax rate	2,822			(86,956		)	15,220
Valuation allowance	187			3,977			—
Uncertain tax positions	—			(1,974		)	2,400
Provision to return adjustments	(6,326		)	(791		)	700
Other, net	(1,367		)	1,433			(6		)
Income tax expense (benefit)	$	(73,382	)	$	(72,067	)	$	205,765

The composition of deferred tax liabilities and deferred tax assets were as follows:



	December 31,
(In thousands)	2015			2014
Deferred Tax Assets
Net operating losses	$	223,402		$	141,961
Alternative minimum tax credits	228,693			227,719
Foreign tax credits	3,837			4,525
Incentive compensation	22,509			21,961
Deferred compensation	7,869			9,531
Post-retirement benefits	13,556			13,689
Other	2,905			5,526
Less valuation allowance	(4,965		)	(4,779		)
Total	497,806			420,133
Deferred Tax Liabilities
Properties and equipment	1,303,840			1,248,532
Equity method investments	1,202			—
Derivative instruments	—			50,750
Total	1,305,042			1,299,282
Net deferred tax liabilities	$	807,236		$	879,149

As of December 31, 2015, the Company had alternative minimum tax credit carryforwards of $228.7 million, which do not expire and can be used to offset regular income taxes in future years to the extent that regular income taxes exceed the alternative minimum tax in any such year. The Company also had net operating loss carryforwards of $685.3 million and $530.4 million for federal and state reporting purposes, respectively, the majority of which will expire between 2021 and 2035. The Company has $4.6 million of state valuation allowances, and believes it is more likely than not that the remainder of the deferred tax benefits will be realized prior to their expiration. Tax benefits related to employee stock-based compensation included in net operating loss carryforwards but not reflected in deferred tax assets as of December 31, 2015 are approximately $117.8 million.

For state income tax purposes, the Company must estimate the respective amounts of future earnings that are subject to income tax in the various states in which the Company operates. These estimates may change based on a variety of factors, including, but not limited to, the composition and location of the Company’s asset base, its employees, and its customers. In 2015, the Company’s overall effective tax rate increased compared to 2014. The overall effective tax rate was significantly lower in 2014 due to a change in the effective state income tax rate based on updated state apportionment factors in the states in which the Company operates. The 2014 decrease in the Company’s state apportionment factors was primarily driven by a shift in the sourcing of revenues based on the location of customers to whom the Company ultimately sells its natural gas in the northeast United States. The 2014 decrease in the effective state income tax rate significantly affected the Company’s estimated net state deferred tax liabilities reflected in its Consolidated Balance Sheet, resulting in an income tax benefit of approximately $87.0 million that was reflected in the Company’s provision for income taxes in 2014.

Unrecognized Tax Benefits

A reconciliation of unrecognized tax benefits is as follows:



	Year Ended December 31,
(In thousands)	2015		2014			2013
Balance at beginning of year	$	663	$	3,700		$	—
Additions based on tax provisions related to the current year	—		—			3,700
Additions for tax positions of prior years	—		—			—
Reductions for tax positions of prior years	—		(3,037		)	—
Settlements	—		—			—
Balance at end of year	$	663	$	663		$	3,700

During 2013, the Company recorded unrecognized tax benefits of $3.7 million based on the allocation of certain gains associated with its divestitures for purposes of computing state income taxes. These benefits were reduced during 2014 by $3.0 million based on changes to the Company's state tax rates. There was no change to the Company's unrecognized tax benefits during 2015. If recognized, the net tax benefit of $0.7 million would not have a material effect on the Company's effective tax rate.

The Company files income tax returns in the U.S. federal, various states and other jurisdictions. The Company is no longer subject to examinations by state authorities before 2011 or by federal authorities before 2012. The Company is currently under examination by the Internal Revenue Service for its 2012 tax year. The Company believes that appropriate provisions have been made for all jurisdictions and all open years, and that any assessment on these filings will not have a material impact on the Company's financial position, results of operations or cash flows.