14.

Income Taxes

The following table sets forth the components of the provision for income taxes in the periods indicated:


	Year Ended December 31,
	2013			2012			2011
Current income tax expense:
U.S. federal	$	39,279		$	126,585		$	174,264
State and local		4,611			22,004			35,128

Total	$	43,890		$	148,589		$	209,392
Deferred income tax (benefit):
U.S. federal	($	46,345	)	($	51,145	)	($	6,718	)
State and local		(7,757	)		(8,426	)		(1,427	)

Total	($	54,102	)	($	59,571	)	($	8,145	)

Total provision (benefit) for income taxes	($	10,212	)	$	89,018		$	201,247

We recognized approximately $298 of state income tax benefit in the year ended December 31, 2013, as a result of state operating losses.

We do not include the PEAKS Trust in our consolidated income tax returns because the PEAKS Trust is a tax-exempt entity. Therefore, we did not recognize income tax expense or benefit for the PEAKS Trust in the provision for income taxes included in our Consolidated Statement of Income for the year ended December 31, 2013. The effect of the exclusion of the PEAKS Trust from our income tax provision is shown in the reconciliation of our effective income tax rate as a percentage of income shown below.

The following table sets forth the components of our deferred income tax assets (liabilities) as of the dates indicated:


	As of December 31,
	2013			2012
Deferral of book costs	($	1,748	)	($	1,810	)
Property and equipment		(1,807	)		(6,416	)
Pension		(10,566	)		(2,712	)
Other		(1,189	)		(2,308	)

Gross deferred tax (liabilities)	($	15,310	)	($	13,246	)


Deferred revenue	$	10,902		$	14,687
Accounts receivable		3,551			6,073
Legal accrual		3,455			2,018
Compensation and benefits		3,316			1,643
Stock-based compensation		20,794			22,680
Operating leases		2,386			735
Legal settlement accrual		0			17,834
Other assets		8,356			18,772
Other contingent liabilities		108,423			30,822

Gross deferred tax assets	$	161,183		$	115,264


Net deferred income tax asset	$	145,873		$	102,018

The difference between the U.S. federal statutory income tax rate and our effective income tax rate as a percentage of income in the periods indicated is reconciled in the following table:


	Year Ended December 31,
	2013			2012			2011
U.S. federal statutory income tax rate		(35.0	%)		35.0	%		35.0	%
PEAKS Trust rate differential		11.9	%		0	%		0	%
State income taxes, net of federal benefit		(5.6	%)		3.4	%		3.9	%
Permanent book/tax differences		2.8	%		0.9	%		0.4	%
Other		(1.5	%)		(0.3	%)		0.1	%

Effective income tax rate		(27.4	%)		39.0	%		39.4	%

The following table sets forth the activity with respect to our unrecognized tax benefits in the period indicated:


	Year Ended December 31,
	2013			2012			2011
Balance as of January 1	$	20,690		$	22,050		$	22,888
Increases (decreases) from:
Tax positions taken during a prior period		1,675			195			1,042
Tax positions taken during the current period		870			759			2,434
Settlements with taxing authorities		186			(1,027	)		(2,487	)
Lapse of statute of limitations		(1,130	)		(1,287	)		(1,827	)

Balance as of December 31	$	22,291		$	20,690		$	22,050

The amount of unrecognized tax benefits that, if recognized, would have affected our effective tax rate as of December 31, 2013 was $10,575. We do not expect the amount of our unrecognized tax benefits to significantly increase or decrease during the next 12 months. The amount of interest and penalties related to unrecognized tax benefits accrued on our Consolidated Balance Sheets was $6,371 as of December 31, 2013 and $5,699 as of December 31, 2012. In each of the years ended December 31, 2013, 2012 and 2011, the amount of interest expense and penalties related to our unrecognized tax benefits that we recognized in our Consolidated Statements of Income was not material.

We file income tax returns in the United States (federal) and in various state and local jurisdictions. As of December 31, 2013, we were no longer subject to federal, state or local income tax examinations for tax years prior to 2010, except in eleven states where we are still subject to income tax examinations for tax year 2009 and one state where we are still subject to income tax examination for the tax years 2005 through 2008.