INCOME TAXES

The following table presents the 2014, 2013 and 2012 income tax expense (benefit):



	Year Ended December 31
	2014(1)			2013(2)			2012(3)
	(In thousands)
Current income taxes:
Federal	$	(94,983	)	$	(52,601	)	$	77,909
State	1,255			(9,477		)	18,400
Foreign	723			6			538
Total current income tax expense (benefit)	(93,005		)	(62,072		)	96,847
Deferred income taxes:
Federal	54,015			15,051			(631		)
State	6,894			4,696			(8,271		)
Total deferred income tax expense (benefit)	60,909			19,747			(8,902		)
Total income tax expense (benefit)	$	(32,096	)	$	(42,325	)	$	87,945


(1)	Excludes $0.9 million of income tax expense related to discontinued operations.


(2)	Excludes $431.0 million of income tax expense related to discontinued operations.


(3)	Excludes $80.4 million of income tax expense related to discontinued operations.

The following is a reconciliation of income tax expense (benefit) computed at the U.S. federal statutory tax rate to income tax expense (benefit) reported in our Consolidated Statements of Operations:



	Year Ended December 31
	2014					2013					2012
	Amount			Percentage		Amount			Percentage		Amount		Percentage
	(In thousands, except percentages)
Tax expense at statutory rate	$	(18,299	)	35.0	%	$	99,062		35.0	%	$	39,116	35.0	%
State income taxes	2,281			(4.4	)	(2,894		)	(1.0	)	6,218		5.6
Tax-free disposition of investment	—			—		(145,524		)	(51.4	)	—		—
Uncertain tax positions	(15,451		)	29.6		6,106			2.2		—		—
Sale of unconsolidated affiliate	—			—		(545		)	(0.2	)	40,411		36.2
Change in valuation allowances	3,016			(5.8	)	(213		)	(0.1	)	366		0.3
Other	(3,643		)	7.0		1,683			0.6		1,834		1.6
Total	$	(32,096	)	61.4	%	$	(42,325	)	(14.9	)%	$	87,945	78.7	%

The tax effects of temporary differences giving rise to deferred income tax assets (liabilities) were:



	December 31
	2014(1)			2013(2)
	(In thousands)
Deferred income tax assets:
Accrued liabilities	$	105,029		$	121,539
Retirement plans and postretirement benefits	38,004			24,312
Share-based compensation	16,261			20,468
Receivables and inventories	11,155			10,275
Derivative financial instruments	1,646			283
State net operating loss carryforwards	35,089			31,824
State tax credit carryforwards	4,748			3,007
Valuation allowances	(13,177		)	(8,733		)
	198,755			202,975
Deferred income tax liabilities:
Property, plant and equipment	(209,168		)	(199,004		)
Intangible assets	(29,612		)	(8,751		)
Cancellation of debt	(11,299		)	—
Other	(843		)	(145		)
	(250,922		)	(207,900		)
Net deferred income tax asset (liability)	$	(52,167	)	$	(4,925	)


(1)	Includes $8.0 million of deferred tax assets related to uncertain tax positions.


(2)	Includes $7.5 million of deferred tax assets related to uncertain tax positions.

These net deferred income tax assets (liabilities) are classified in our Consolidated Balance Sheets as follows:



	December 31
	2014			2013
	(In thousands)
Current assets	$	50,362		$	60,143
Noncurrent assets	35,415			35,623
Noncurrent liabilities	(137,944		)	(100,691		)
Total	$	(52,167	)	$	(4,925	)

At December 31, 2014, we had $35.1 million of tax-effected state net operating losses and $4.7 million of state tax credits available for carryover to future years. These items are subject to certain limitations and begin to expire in 2015. A valuation allowance of $13.2 million has been established because we do not believe it is more likely than not that all of the deferred tax assets related to these items will be realized prior to expiration. Our valuation allowance increased $4.4 million in 2014 for certain state tax credits not expected to be utilized after the divestiture of Morningstar and for certain state net operating loss carryforwards no longer expected to be utilized.

The following is a reconciliation of gross unrecognized tax benefits, including interest, recorded in our Consolidated Balance Sheets:



	December 31
	2014			2013			2012
	(In thousands)
Balance at beginning of year	$	40,478		$	27,734		$	29,128
Increases in tax positions for current year	—			18,230			230
Increases in tax positions for prior years	11,432			2,315			5,075
Decreases in tax positions for prior years	(21,194		)	(6,192		)	(3,697		)
Settlement of tax matters	(4,203		)	(1,232		)	(2,127		)
Lapse of applicable statutes of limitations	(50		)	(377		)	(875		)
Balance at end of year	$	26,463		$	40,478		$	27,734

These unrecognized tax benefits are classified in our Consolidated Balance Sheets as follows:



	December 31
	2014		2013		2012
	(In thousands)
Accrued expenses	$	295	$	3,348	$	1,427
Other long-term liabilities	26,168		37,130		26,307
Total	$	26,463	$	40,478	$	27,734

Of the balance at December 31, 2014, $2.2 million would impact our effective tax rate and $16.3 million would be recorded in discontinued operations, if recognized. The remaining $8.0 million represents tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Due to the impact of deferred income tax accounting, the disallowance of the shorter deductibility period would not affect our effective tax rate but would accelerate payment of cash to the applicable taxing authority. We do not expect any material changes to our liability for uncertain tax positions during the next 12 months.

We recognize accrued interest related to uncertain tax positions as a component of income tax expense. Penalties, if incurred, are recorded in general and administrative expenses in our Consolidated Statements of Operations. Interest expense recorded in income tax expense for 2014, 2013 and 2012 was immaterial. Our liability for uncertain tax positions included accrued interest of $1.3 million and $2.0 million at December 31, 2014 and 2013, respectively.

During 2014, the Internal Revenue Service ("IRS") officially closed their examination of our 2007 through 2011 U.S. consolidated income tax returns after receiving approval by the U.S. Congressional Joint Committee on Taxation. Our 2012 through 2014 U.S. consolidated income tax returns remain open for examination by the IRS. State income tax returns are generally subject to examination for a period of three to five years after filing. We have various state income tax returns in the process of examination, appeals or settlement.