Income Taxes

Following is a summary of the provision for (benefit from) income taxes (in thousands):



Years Ended December 31,	2011		2010			2009
Federal:
Current	$	11,136	$	(2,330	)	$	10,288
Deferred	7,914		(36,519		)	22,574
Total federal	19,050		(38,849		)	32,862
State:
Current	2,952		(1,071		)	5,381
Deferred	1,346		(4,008		)	407
Total state	4,298		(5,079		)	5,788
Total provision for (benefit from) income taxes	$	23,348	$	(43,928	)	$	38,650

Following is detail of the provision for (benefit from) income taxes and a reconciliation of the statutory to effective tax rate (dollars in thousands):



Years Ended December 31,	2011					2010					2009
	Amount			Percent		Amount			Percent		Amount			Percent
Federal statutory tax	$	31,301		35.0		$	(37,232	)	35.0		$	48,598		35.0
State taxes, net of federal tax benefit	3,497			3.9		(4,500		)	4.2		3,978			2.7
Percentage depletion deduction	(1,254		)	(1.4	)	(997		)	0.9		(1,717		)	(1.2	)
Domestic production deduction	(1,604		)	(1.8	)	100			(0.1	)	(765		)	(0.6	)
Noncontrolling interests	(5,223		)	(5.8	)	1,213			(1.1	)	(9,345		)	(6.7	)
Settlements and effective settlements of audit issues	(2,348		)	(2.6	)	330			(0.3	)	—			—
Other	(1,021		)	(1.2	)	(2,842		)	2.7		(2,099		)	(1.4	)
Total	$	23,348		26.1		$	(43,928	)	41.3		$	38,650		27.8

Our effective tax rate decreased to 26.1% in 2011 from 41.3% in 2010. The most significant change was due to the effect of noncontrolling interests as a percentage of net income (loss), as noncontrolling interests are not subject to income taxes on a stand-alone basis. Additionally, included in the tax rate for the year ended December 31, 2011, is the recognition and measurement of previously unrecognized tax benefits. The recognition and measurement of these tax benefits were the result of a favorable settlement of an income tax examination conducted by the Internal Revenue Service. Our tax rate is affected by discrete items that may occur in any given year, but are not consistent from year to year.

Following is a summary of the deferred tax assets and liabilities (in thousands):



December 31,	2011			2010
Deferred tax assets:
Receivables	$	2,929		$	3,145
Inventory	6,308			7,780
Insurance	7,142			3,775
Deferred compensation	16,485			19,848
Other accrued liabilities	9,244			9,888
Contract income recognition	4,253			15,679
Impairments on real estate investments	18,895			27,304
Other	4,906			1,145
Net operating loss carryforward	9,510			10,477
Valuation allowance	(10,668		)	(13,111		)
Total deferred tax assets	69,004			85,930
Deferred tax liabilities:
Property and equipment	34,467			42,827
Total deferred tax liabilities	34,467			42,827
Net deferred tax assets	$	34,537		$	43,103

The above amounts are reflected in the accompanying consolidated balance sheets as follows (in thousands):



December 31,	2011		2010
Current deferred tax assets, net	$	38,571	$	53,877
Long-term deferred tax liabilities, net	4,034		10,774
Net deferred tax assets	$	34,537	$	43,103

The deferred tax asset for other accrued liabilities relates to various items including accrued compensation, accrued rent and accrued reclamation costs, which are realizable in future periods. Our deferred tax asset for net operating loss carryforward relates to state and local net operating loss carryforwards which expire between 2021 and 2030. We have provided a valuation allowance on the net deferred tax assets for certain state and local jurisdictions because we do not believe their realizability is more likely than not.

The following is a summary of the change in valuation allowance (in thousands):



December 31,	2011			2010		2009
Beginning balance	$	13,111		$	13,018	$	11,649
(Deductions) additions	(2,443		)	93		1,369
Ending balance	$	10,668		$	13,111	$	13,018

Uncertain tax positions: We file income tax returns in the U.S. and various state and local jurisdictions. During 2011, we reached an agreement with the Internal Revenue Service (“IRS”) for the years 2006 and 2007, resulting in the recognition of $3.3 million in previously unrecognized tax benefits. Our 2005 through 2007 tax years remain open to examination by state taxing authorities. We are no longer subject to U.S. federal examinations by tax authorities for years before 2008.

We had approximately $3.1 million and $6.3 million of total gross unrecognized tax benefits as of December 31, 2011 and 2010, respectively. There were approximately $1.1 million and $5.0 million of unrecognized tax benefits that would affect the effective tax rate in any future period at December 31, 2011 and 2010, respectively. We do not anticipate a significant increase or decrease in our unrecognized tax benefits that will impact our effective tax rate in 2012.

The following is a tabular reconciliation of unrecognized tax benefits (in thousands) the balance of which is included in other long-term liabilities on the consolidated balance sheets:



December 31,	2011			2010			2009
Beginning balance	$	5,650		$	5,882		$	3,888
Gross increases – current period tax positions	1,726			180			1,107
Gross decreases – current period tax positions	(1,420		)	(453		)	(1,851		)
Gross increases – prior period tax positions	1,485			4,009			3,537
Gross decreases – prior period tax positions	(1,467		)	(1,641		)	(677		)
Settlements with taxing authorities/lapse of statute of limitations	(3,635		)	(2,327		)	(122		)
Ending balance	$	2,339		$	5,650		$	5,882

We record interest related to uncertain tax positions as interest expense in our consolidated statements of operations. During the years ended December 31, 2011, 2010 and 2009, we recognized approximately $0.1 million of interest expense, $0.4 million of interest income and $0.7 million of interest expense, respectively. Approximately $0.8 million and $0.7 million of accrued interest were included in our uncertain tax position liability in our consolidated balance sheets at December 31, 2011 and 2010, respectively.