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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes |
(5) | INCOME TAXES
Our income tax expense from continuing operations was $33.9 million for the year ended December 31, 2013 compared to $12.1 million in 2012 and $35.6 million in 2011. Reconciliation between the statutory federal income tax rate and our effective income tax rate is as follows:
| Year Ended December 31, |
| 2013 |  | 2012 |  |  | 2011 |
Federal statutory tax rate | 35.0 | % |  | 35.0 | % |  |  | 35.0 | %
State | (2.3 | ) |  | 0.7 |  |  |  | 7.0 |
State apportionment rate change | (14.9 | ) |  | ¾ |  |  |  | ¾ |
Non-deductible executive compensation | 0.7 |  |  | 1.4 |  |  |  | 3.5 |
Valuation allowances | 3.5 |  |  | 8.8 |  |  |  | (0.4 | )
Other | 0.6 |  |  | 2.2 |  |  |  | 0.3 |
Consolidated effective tax rate | 22.6 | % |  | 48.1 | % |  |  | 45.4 | %
Income tax expense (benefit) attributable to income from continuing operations before income taxes consists of the following (in thousands):
|  |  | 2013 |  |  |  | 2012 |  |  |  | 2011 |
|  |  | Current |  |  | Deferred |  |  | Total |  |  | Current |  |  | Deferred |  |  | Total |  |  | Current |  |  | Deferred |  |  | Total |
U.S. federal |  | $ | ¾ |  |  | $ | 58,527 |  |  | $ | 58,527 |  |  | $ | — |  |  | $ | 11,873 |  |  | $ | 11,873 |  |  | $ | — |  |  | $ | 30,055 |  |  | $ | 30,055 |
U.S. state and local |  |  | (143 | ) |  |  | (24,527 | ) |  |  | (24,670 | ) |  |  | (1,778 | ) |  |  | 1,959 |  |  |  | 181 |  |  |  | 637 |  |  |  | 4,865 |  |  |  | 5,502 |
Total |  | $ | (143 | ) |  | $ | 34,000 |  |  | $ | 33,857 |  |  | $ | (1,778 | ) |  | $ | 13,832 |  |  | $ | 12,054 |  |  | $ | 637 |  |  | $ | 34,920 |  |  | $ | 35,557 |
Significant components of deferred tax assets and liabilities are as follows:
| December 31, |
| 2013 |  |  | 2012 |
| (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Current |  |  |  |  |  |  |
Deferred compensation | $ | 9,128 |  |  | $ | 6,192 |
Current portion of asset retirement obligation |  | 1,854 |  |  |  | 961 |
Cumulative unrealized mark-to-market loss |  | 15,193 |  |  |  | ¾ |
Net operating loss carryforward |  | 23,079 |  |  |  | ¾ |
Other |  | 7,937 |  |  |  | 8,896 |
Total current |  | 57,191 |  |  |  | 16,049 |
Non-current |  |  |  |  |  |  |
Net operating loss carryforward |  | 57,266 |  |  |  | 56,402 |
Deferred compensation |  | 91,094 |  |  |  | 72,904 |
Equity compensation |  | 22,800 |  |  |  | 23,363 |
AMT credits and other credits |  | 4,122 |  |  |  | 2,761 |
Non-current portion of asset retirement obligation |  | 86,126 |  |  |  | 56,764 |
Cumulative unrealized mark-to-market gain |  | ¾ |  |  |  | (262 | )
Other |  | 1,116 |  |  |  | 1,379 |
Valuation allowance |  | (14,781 | ) |  |  | (9,052 | )
Total non-current |  | 247,743 |  |  |  | 204,259 |
Deferred tax liabilities: |  |  |  |  |  |  |
Current |  |  |  |  |  |  |
Net unrealized gain in AOCI related to hedge derivatives |  | (3,987 | ) |  |  | (49,124 | )
Other |  | (1,789 | ) |  |  | (2,004 | )
Cumulative unrealized mark-to-market gain |  | ¾ |  |  |  | (2,845 | )
Total current |  | (5,776 | ) |  |  | (53,973 | )
Non-current |  |  |  |  |  |  |
Depreciation, depletion and investments |  | (1,010,757 | ) |  |  | (894,031 | )
Cumulative unrealized mark-to-market gain |  | (6,424 | ) |  |  | ¾ |
Other |  | (2,542 | ) |  |  | (4,008 | )
Net unrealized gain in AOCI related to hedge derivatives |  | ¾ |  |  |  | (4,522 | )
Total non-current |  | (1,019,724 | ) |  |  | (902,561 | )
Net deferred tax liability | $ | (720,566 | ) |  | $ | (736,226 | )
At December 31, 2013, deferred tax liabilities exceeded deferred tax assets by $720.6 million, with $4.0 million of deferred tax liability related to net deferred hedging gains included in AOCI. As of December 31, 2013, we have a $11.4 million valuation allowance on the deferred tax asset related to our deferred compensation plan for planned future distributions to certain executives to the extent that their estimated future compensation plus distribution amounts would exceed the $1.0 million deductible limit provided under I.R.C. Section 162(m). We also have a $3.0 million valuation allowance on our state net operating loss carryforwards and a $363,000 valuation allowance on a capital loss carryforward. At December 31, 2013, we had regular net operating loss (“NOL”) carryforwards of $354.2 million and alternative minimum tax (“AMT”) NOL carryforwards of $304.7 million that expire between 2018 and 2033. Our deferred tax asset related to regular NOL carryforwards at December 31, 2013 was $39.0 million, which is net of the Accounting Standards Codification 718 Stock Compensation reduction for unrealized benefits, related to NOL’s created by excess tax deductions that have not generated current tax benefits. We expect to utilize approximately $250 million in federal net operating loss carryforwards and $245 million in alternative minimum tax net operating loss carryforwards in 2014 and have included the tax effect of this portion of our NOL in current deferred tax assets. At December 31, 2013, we have AMT credit carryforwards of $665,000 that are not subject to limitation or expiration. We file consolidated tax returns in the United States federal jurisdiction. We file separate company state income tax returns in Louisiana, Mississippi, Pennsylvania and Virginia and file consolidated or unitary state income tax returns in New Mexico, Oklahoma, Texas and West Virginia. We are subject to U.S. Federal income tax examinations for the years 2010 and after and we are subject to various state tax examinations for years 2009 and after. We have not extended the statute of limitation period in any income tax jurisdiction. Our policy is to recognize interest related to income tax expense in interest expense and penalties in general and administrative expense. We do not have any accrued interest or penalties related to tax amounts as of December 31, 2013. Throughout 2013, our unrecognized tax benefits were not material.

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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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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 Reference 6: 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 + Details
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