12.	Income Taxes and Deferred Tax Asset/Liability

The Company and its subsidiaries file U.S. federal and various U.S. state income tax returns. Current income tax expense (or benefit) represents federal and state taxes based on tax paid or expected to be payable or receivable for the periods shown in the consolidated statements of operations.

We have federal and state NOL carryforwards of

$112.9

million and

$56.1

million, respectively, which will expire at various dates in the next

years for U.S. federal income tax and in the next

years for the various state jurisdictions where we operate. Such NOL carryforwards expire as follows (in thousands):

Year	Amount
2020	$	15
2021		5
2028		8,745
2029		3,480
2033		72,046
2034		41,433
2035		30,635
2036		12,686
Total	$	169,045

Current income tax expense represents federal and state income tax paid or expected to be payable for the years shown in the consolidated statements of operations. The income tax expense in the accompanying consolidated financial statements consists of the following (amounts in thousands):

	Years Ended December 31,
	2016		2015		2014
Current tax expense	$	88	$	7	$	632
Deferred tax expense		--		--		--
Total tax expense	$	88	$	7	$	632

The effective income tax rate varied from the statutory rate primarily as a result of the change in the valuation allowance, net income attributable to noncontrolling interest owners, which is taxable to those owners rather than to the Company, state income taxes and other permanent differences. The income tax provision differs from the amount using the statutory federal income tax rate of

35%

for the following reasons (amounts in thousands):

	Years Ended December 31,
	2016						2015						2014
	Amount			%			Amount			%			Amount			%
Tax benefit at the U.S. federal statutory rate	$	(2,563	)		35.0	%	$	(6,013	)		35.0	%	$	(1,608	)		35.0	%
State tax based on income, net of refunds and federal benefits		(113	)		1.5			(860	)		5.0			(155	)		3.4
Taxes on subsidiaries’ and joint ventures’ earnings allocated to noncontrolling interests owners		(3,786	)		51.7			(2,620	)		15.3			(2,365	)		51.5
Valuation allowance		6,919			(94.5	)		10,036			(58.4	)		4,152			(90.4	)
Tax credits		(1,258	)		17.2			(551	)		3.2			--			--
Reduction of tax receivable		--			--			--			--			524			(11.4	)
Return to provision		400			(5.5	)		--			--			--			--
Earn-out liability		433			(5.9	)		--			--			--			--
Other permanent differences		56			(0.8	)		15			(0.1	)		84			(1.9	)
Income tax expense	$	88			(1.3	)%	$	7			--	%	$	632			(13.8	)%

Deferred tax assets and liabilities consist of the following (amounts in thousands):

	Long Term
	As of December 31,
	2016			2015
Assets related to:
Accrued compensation and other	$	4,490		$	2,084
Goodwill		3,909			6,705
Noncontrolling interest		2,085			2,247
Deferred revenue		482			688
Revaluation of put/call liabilities		16,620			18,638
Net operating loss carryforwards		41,942			39,317
Valuation allowance for deferred tax assets		(58,034	)		(56,399	)
Liabilities related to:
Depreciation of property and equipment		(11,471	)		(11,766	)
Receivables from and equity in construction joint ventures		--			(1,494	)
Other		(23	)		(20	)
Net asset	$	--		$	--

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the

three

-year period ended

December

31,

2016.

The cumulative

three

-year period loss that remained at

December

31,

2016

was the result of write-downs recorded during the past

three

years. Such objective evidence limits the ability to consider other subjective evidence such as our projections for future growth. On the basis of this evaluation, as of

December

31,

2016,

a valuation allowance of

$58.0

million was recorded on the net deferred tax assets including federal and state net operating losses as they are not likely to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted in the future if objective negative evidence or cumulative losses are no longer present and additional weight

may

be given to subjective evidence such as our projections for growth.

If our assumptions change and we determine we will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets as of

December

31,

2016,

will be accounted for as follows: approximately

$48.3

million will be recognized as a reduction of income tax expense and

$9.7

million will be recorded as an increase in equity.

As a result of the Company’s analysis, management has determined that the Company does not have any material uncertain tax positions. The Company’s policy is to recognize interest related to any underpayment of taxes as interest expense and penalties as administrative expenses.

interest or penalties have been accrued at

December

31,

2016

2015.

The Company’s U.S. federal income tax returns for

2013

and later years are open and subject to examination by the I.R.S. In addition, the Company’s state income tax returns for

2012

and later years are open and subject to examination.