(13)	Income Taxes

Total income tax expense for the years ended December 31, 2013 and 2012 were allocated as follows (in thousands):

		2013				2012
Income from continuing operations		$	(2,384	)			1,597

For the years ended December 31, 2013 and 2012, (loss) income before income tax expense consists of the following (in thousands):

	2013			2012
U.S. operations	$	(92,670	)		1,602
Foreign operations		1,720			(1,286	)
	$	(90,950	)		316

The components of the provision for income tax (benefit) expense included in the consolidated statements of operations and comprehensive loss are as follows for the years ended December 31, 2013 and 2012 (in thousands):

	2013			2012
Current:
Federal	$	—			—
State and local, net of federal income tax benefit		13			342
Foreign		480			(426	)
		493			(84	)
Deferred:
Federal		592			1,603
State and local, net of federal income tax benefit		(169	)		73
Foreign		(3,300	)		5
		(2,877	)		1,681
Total income tax (benefit) expense	$	(2,384	)		1,597

For the year ended December 31, 2013 and 2012, approximately $4.7 million and $19 thousand of Puerto Rico net operating loss carry-forwards were utilized. For the year ended December 31, 2013 and 2012, no federal net operating loss carry-forwards were utilized.

The tax effect of temporary differences and carry-forwards that give rise to deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 are as follows (in thousands):

	2013			2012
Deferred tax assets:
Federal and state net operating loss carryforwards	$	88,893			78,438
Foreign net operating loss carryforwards		14,081			12,207
FCC licenses		12,080			19,136
Allowance for doubtful accounts		2,512			1,850
Unearned revenue		210			204
AMT credit		1,194			824
Derivatives and hedging instruments		249			339
Property and equipment		1,019			413
Accrued foreign withholding		1,934			1,832
Straight-line expense adjustments		290			545
Accrued restructuring		58			396
Production costs		11,179			10,093
Stock-based compensation		1,621			1,602
Intercompany expenses		1,347			—
Other		2,339			2,940
Total gross deferred tax assets		139,006			130,819
Less valuation allowance		(134,881	)		(129,995	)
Net deferred tax assets		4,125			824
Deferred tax liabilities:
FCC licenses		87,297			86,873
Total gross deferred tax liabilities		87,297			86,873
Net deferred tax liability	$	83,172			86,049

The net change in the total valuation allowance for the years ended December 31, 2013 and 2012 was an increase of $4.9 million and a decrease of $4.1 million, respectively. The valuation allowance at 2013 and 2012 was primarily related to domestic and foreign net operating loss carryforwards and future deductible amounts related to the excess tax basis over the book basis of certain FCC broadcasting licenses. In 2013, the overall increase in valuation allowance was primarily due to NOLs generated during the current year. As a result of adopting ASC 350 on December 31, 2001, amortization of the FCC broadcasting licenses stopped for financial statement purposes. However, the tax amortization of certain FCC broadcasting licenses recognized during the year as well as the expiration of certain net operating losses resulted in a decrease in gross deferred tax assets related to those intangibles and the net operating losses, which were accompanied by an offsetting decrease in the related valuation allowance for the year ending December 31, 2012.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As of December 31, 2013, the valuation allowance is comprised of $115.5 million in the US and $19.4 million in Puerto Rico. If the realization of deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made. During the year ended 2013, the valuation allowance of one of our Puerto Rico subsidiaries was decreased by $2.8 million.

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, at this time, management believes it is more likely than not that we will not realize the benefits of the majority of these deductible differences. As a result, we have established and maintained a valuation allowance for that portion of the deferred tax assets we believe will not be realized. At December 31, 2013, we have federal and state net operating loss carry-forwards of approximately $215 million and $263 million, respectively. These net operating loss carry-forwards are available to offset future taxable income and expire from the years 2014 through 2033. In addition, at December 31, 2013, we have foreign net operating loss carry-forwards of approximately $36.7 million available to offset future taxable income expiring from the years 2016 through 2023.

Total income tax expense from continuing operations differed from the amounts computed by applying the U.S. federal income tax rate of 35% for the years ended December 31, 2013 and 2012, as a result of the following:

	2013			2012
Computed “expected” tax expense		35.0	%		35.0	%
State and local income taxes, net of federal benefit		6.6			86.6
Foreign tax differential		0.2			20.4
Current year change in valuation allowance		(5.5	)		(1,314.7	)
Nondeductible expenses		(40.6	)		50.0
Change in effective rate		0.3			(71.8	)
Change in Puerto Rico statutory rate		5.7			—
Expiration of net operating losses		—			759.0
Other		0.9			940.9
		2.6	%		505.4	%

U.S. Federal jurisdiction and the jurisdictions of Florida, New York, California, Illinois, Texas and Puerto Rico are the major tax jurisdictions where we file income tax returns. The tax years that remain subject to assessment of additional liabilities by the federal, state and local tax authorities are 2010 through 2013. The tax years that remain subject to assessment of additional liabilities by the Puerto Rico tax authority are 2008 through 2013.

For the years ended December 31, 2013 and 2012, we did not have any unrecognized tax benefits as a result of tax positions taken during a prior period or during the current period. No interest or penalties have been recorded as a result of tax uncertainties. Our evaluation was performed for the tax years ended December 31, 2008 through December 31, 2013, which are the tax years that remain subject to examination by the tax jurisdictions as of December 31, 2013. We do not expect any unrecognized tax benefits to significantly change over the next twelve months.