Income Taxes

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



Years Ended December 31,	2013			2012			2011
Federal:
Current	$	(1,298	)	$	10,410		$	11,136
Deferred	(18,606		)	9,518			7,914
Total federal	(19,904		)	19,928			19,050
State:
Current	1,592			4,689			2,952
Deferred	(951		)	(3,508		)	1,346
Total state	641			1,181			4,298
Total (benefit from) provision for income taxes	$	(19,263	)	$	21,109		$	23,348

Following is a reconciliation of our (benefit from) provision for income taxes based on the Federal statutory tax rate to our effective tax rate (dollars in thousands):



Years Ended December 31,	2013					2012					2011
Federal statutory tax	$	(22,411	)	35.0	%	$	28,360		35.0	%	$	31,301		35.0	%
State taxes, net of federal tax benefit	101			(0.2	)	5,299			6.5		3,497			3.9
Valuation allowance release	—			—		(5,803		)	(7.2	)	—			—
Percentage depletion deduction	(787		)	1.2		(1,422		)	(1.8	)	(1,254		)	(1.4	)
Domestic production deduction	(27		)	0.1		(1,367		)	(1.7	)	(1,604		)	(1.8	)
Non-controlling interests	2,920			(4.6	)	(5,124		)	(6.3	)	(5,223		)	(5.8	)
Settlements and effective settlements of audit issues	—			—		—			—		(2,348		)	(2.6	)
Nondeductible expenses	2,384			(3.7	)	1,918			2.4		1,000			1.1
Other	(1,443		)	2.3		(752		)	(0.8	)	(2,021		)	(2.3	)
Total	$	(19,263	)	30.1	%	$	21,109		26.1	%	$	23,348		26.1	%

Our effective tax rate increased to 30.1% in 2013 from 26.1% in 2012. The most significant change was due to the effect of non-controlling interest as a percentage of net (loss) income, as non-controlling interests are not subject to income taxes on a standalone basis. Additionally, included in the tax rate for the year ended December 31, 2012, is the release of a state valuation allowance. 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,	2013			2012
Deferred tax assets:
Receivables	$	2,870		$	2,876
Inventory	4,637			5,611
Insurance	10,813			10,476
Deferred compensation	13,372			14,055
Other accrued liabilities	6,739			7,184
Contract income recognition	11,503			4,171
Impairments on real estate investments	14,313			5,002
Accrued compensation	7,206			6,064
Other	420			416
Net operating loss carryforward	4,439			8,359
Valuation allowance	(3,731		)	(5,242		)
Total deferred tax assets	72,581			58,972
Deferred tax liabilities:
Property and equipment	24,500			30,448
Total deferred tax liabilities	24,500			30,448
Net deferred tax assets	$	48,081		$	28,524

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



December 31,	2013		2012
Current deferred tax assets, net	$	55,874	$	36,687
Long-term deferred tax liabilities, net	7,793		8,163
Net deferred tax assets	$	48,081	$	28,524

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 2026 and 2029. 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,	2013			2012			2011
Beginning balance	$	5,242		$	10,668		$	13,111
Deductions	(1,511		)	(5,426		)	(2,443		)
Ending balance	$	3,731		$	5,242		$	10,668

Uncertain tax positions: We file income tax returns in the U.S. and various state and local jurisdictions. We are currently under examination by various state taxing authorities for various tax years. We do not anticipate that any of these audits will result in a material change in our financial position. We are no longer subject to U.S. federal examinations by tax authorities for years before 2008. With few exceptions, as of December 31, 2013, we are no longer subject to state examinations by taxing authorities for years before 2008.

We had approximately $2.2 million and $2.3 million of total gross unrecognized tax benefits as of December 31, 2013 and 2012, respectively. There were approximately $1.3 million and $0.8 million of unrecognized tax benefits that would affect the effective tax rate in any future period at December 31, 2013 and 2012, respectively. We believe that it is reasonably possible that approximately $0.6 million of our currently remaining unrecognized tax benefits, each of which are individually insignificant, may be recognized by the end of 2014 as a result of a lapse of statute limitations.

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,	2013			2012			2011
Beginning balance	$	2,315		$	2,339		$	5,650
Gross increases – current period tax positions	363			1,017			1,726
Gross decreases – current period tax positions	(638		)	(800		)	(1,420		)
Gross increases – prior period tax positions	508			4			1,485
Gross decreases – prior period tax positions	(2		)	(245		)	(1,467		)
Settlements with taxing authorities/lapse of statute of limitations	(315		)	—			(3,635		)
Ending balance	$	2,231		$	2,315		$	2,339

We record interest related on uncertain tax positions as interest expense in our consolidated statements of operations. During the years ended December 31, 2013, 2012 and 2011, we recognized approximately $0.1 million of interest expense, $0.1 million of interest expense and $0.1 million of interest income, respectively. Approximately $1.0 million and $0.9 million of accrued interest were included in our uncertain tax position liability on our consolidated balance sheets at December 31, 2013 and 2012, respectively.