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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes Components of current and deferred income tax expense (benefit) are as follows ($000’s omitted):
| 2015 |  | 2014 |  | 2013
Current expense (benefit) |  |  |  |  |
Federal | $ | 8,760 |  |  | $ | 5,619 |  |  | $ | 5,725 |
State and other | 1,474 |  |  | (13,968 | ) |  | (1,596 | )
| $ | 10,234 |  |  | $ | (8,349 | ) |  | $ | 4,129 |
Deferred expense (benefit) |  |  |  |  |
Federal | $ | 277,895 |  |  | $ | 232,969 |  |  | $ | (1,833,580 | )
State and other | 33,804 |  |  | (9,200 | ) |  | (262,843 | )
| $ | 311,699 |  |  | $ | 223,769 |  |  | $ | (2,096,423 | )
Income tax expense (benefit) | $ | 321,933 |  |  | $ | 215,420 |  |  | $ | (2,092,294 | )
The following table reconciles the statutory federal income tax rate to the effective income tax rate:
| 2015 |  | 2014 |  | 2013
Income taxes at federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes, net of federal tax | 2.8 |  |  | 3.0 |  |  | 4.0 |
Deferred tax asset valuation allowance | 0.4 |  |  | (6.6 | ) |  | (438.0 | )
Tax contingencies | 0.1 |  |  | (1.4 | ) |  | 0.3 |
Other | 1.2 |  |  | 1.2 |  |  | 2.3 |
Effective rate | 39.5 | % |  | 31.2 | % |  | (396.4 | )%
Our effective tax rate was 39.5%, 31.2% and (396.4)% for 2015, 2014, and 2013 respectively. The 2015 effective tax rate exceeds the federal statutory rate, primarily due to state taxes including changes in valuation allowance on state deferred tax assets and revaluation of deferred tax assets due to state law changes and business operations. The 2014 effective tax rate is less than the federal statutory rate primarily due to reversal of a portion of our valuation allowance related to certain state deferred tax assets, along with the favorable resolution of certain federal and state income tax matters. The 2013 effective tax rate differed from the federal statutory rate primarily due to the reversal of substantially all of the valuation allowance related to our federal and certain state deferred tax assets. Deferred tax assets and liabilities reflect temporary differences arising from the different treatment of items for tax and accounting purposes. Components of our net deferred tax asset are as follows ($000’s omitted):
| At December 31,
| 2015 |  | 2014
Deferred tax assets: |  |  |
Accrued insurance | $ | 237,836 |  |  | $ | 254,031 |
Non-deductible reserves and other | 155,488 |  |  | 191,097 |
Inventory valuation reserves | 476,673 |  |  | 599,763 |
Net operating loss ("NOL") carryforwards: |  |  |
Federal | 367,302 |  |  | 515,568 |
State | 274,686 |  |  | 257,738 |
Alternative minimum tax credit carryforwards | 44,161 |  |  | 34,812 |
Energy and other credit carryforwards | 28,669 |  |  | 27,858 |
| 1,584,815 |  |  | 1,880,867 |
Deferred tax liabilities: |  |  |
Capitalized items, including real estate basis differences, deducted for tax, net | (39,220 | ) |  | (31,584 | )
Trademarks and tradenames | (41,664 | ) |  | (46,362 | )
| (80,884 | ) |  | (77,946 | )
Valuation allowance | (109,052 | ) |  | (82,253 | )
Net deferred tax asset | $ | 1,394,879 |  |  | $ | 1,720,668 |
Our gross federal NOL carryforward is approximately $1.0 billion and expires between 2028 and 2032. We also have significant state NOLs in various jurisdictions which may generally be carried forward from 5 to 20 years, depending on the jurisdiction. The state NOL carryforwards expire at various dates as follows: of the total state DTA, $32.2 million from 2016 to 2020, $46.1 million from 2021 to 2025, and $196.4 million from 2026 to 2035. In addition, we have federal energy credit carryforwards expiring in 2026 to 2034 and alternative minimum tax credits that can be carried forward indefinitely. We evaluate our deferred tax assets each period to determine if a valuation allowance is required based on whether it is "more likely than not" that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods. We conduct our evaluation by considering all available positive and negative evidence. This evaluation considers, among other factors, historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. housing industry and broader economy. As a result of the merger with Centex in 2009, our ability to use certain of Centex’s pre-ownership change NOL carryforwards and built-in losses or deductions is limited by Section 382 of the Internal Revenue Code. We do not believe that the Section 382 limitation will prevent the Company from using Centex’s pre-ownership change federal NOL carryforwards and built-in losses. We do believe that certain of our state NOL carryforwards will be limited due to Section 382. The accounting for deferred taxes is based upon estimates of future results. Differences between estimated and actual results could result in changes in the valuation of our deferred tax assets that could have a material impact on our consolidated results of operations or financial position. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time. In 2014, we recorded an income tax benefit of $45.6 million as the result of a reversal of valuation allowance related primarily to certain of our state deferred tax assets as the result of an increase in expected future taxable income in certain jurisdictions. In 2013, we recorded an income tax benefit of $2.1 billion as the result of a reversal of valuation allowance. Based on previous evaluations, we had fully reserved our net deferred tax assets due to the uncertainty of their realization. One of the primary pieces of negative evidence we considered was the significant losses we had incurred in the recent years prior to 2013, including being in a three-year cumulative pre-tax loss position, which we exited in 2013. During 2013, we determined that the valuation allowance against substantially all of our federal deferred tax assets and a significant portion of our state deferred tax assets was no longer required. Accordingly, we reversed $2.1 billion of valuation allowance. We conduct our evaluations by considering all available positive and negative evidence. The principal positive evidence that led to the reversal of the valuation allowance in 2013 included: (1) our emergence from a three-year cumulative loss in 2013; (2) the significant positive income we generated during 2012 and 2013, including seven consecutive quarters of pretax income as of December 31, 2013; (3) continued improvements in 2013 over recent years in other key operating metrics, including revenues, gross margin, and overhead leverage; (4) our forecasted future profitability; (5) improvement in our financial position; and (6) significant evidence that conditions in the U.S. housing industry were more favorable than in recent years and our belief that conditions would continue to be favorable over the long-term. Even if industry conditions weaken from current levels, we believe we will be able to adjust our operations to sustain long-term profitability. As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities does not include certain deferred tax assets as of December 31, 2015 and 2014, that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting. Equity will be increased by $19.4 million if and when such deferred tax assets are ultimately realized. We use the with-and-without approach when determining when excess tax benefits have been realized. Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. We had $39.0 million and $32.9 million of gross unrecognized tax benefits at December 31, 2015 and 2014, respectively. Of these amounts, $39.0 million and $32.9 million, respectively, would impact the effective tax rate if recognized. Additionally, we had accrued interest and penalties of $17.2 million and $17.3 million at December 31, 2015 and 2014, respectively. It is reasonably possible within the next twelve months that our gross unrecognized tax benefits may decrease by up to $35.0 million, excluding interest and penalties, primarily due to potential settlements. A reconciliation of the change in the unrecognized tax benefits is as follows ($000’s omitted):
| 2015 |  | 2014 |  | 2013
Unrecognized tax benefits, beginning of period | $ | 32,911 |  |  | $ | 173,310 |  |  | $ | 170,425 |
Increases related to tax positions taken during a prior period | 5,763 |  |  | — |  |  | 12,877 |
Decreases related to tax positions taken during a prior period | — |  |  | (133,883 | ) |  | (7,502 | )
Increases related to tax positions taken during the current period | 318 |  |  | 237 |  |  | 381 |
Decreases related to settlements with taxing authorities | — |  |  | (6,753 | ) |  | (1,434 | )
Reductions as a result of a lapse of the applicable statute of limitations | — |  |  | — |  |  | (1,437 | )
Unrecognized tax benefits, end of period | $ | 38,992 |  |  | $ | 32,911 |  |  | $ | 173,310 |
We continue to participate in the Compliance Assurance Process (“CAP”) with the IRS as an alternative to the traditional IRS examination process. As a result of our participation in CAP, federal tax years 2013 and prior are closed. Tax year 2014 is expected to close by the second quarter of 2016, and tax year 2015 is expected to close by the second quarter of 2017. We are currently under examination by various state taxing jurisdictions and anticipate finalizing certain of the examinations within the next twelve months. The final outcome of these examinations is not yet determinable. The statute of limitations for our major tax jurisdictions remains open for examination for tax years 2005 to 2015.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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