9. Income Taxes

The income tax provision consisted of the following for the years ended December 31:

(in thousands)	2014		2013		2012
Current
Federal	$	14,720	$	16,812	$	14,856
State		3,031		2,920		2,885
		17,751		19,732		17,741
Deferred
Federal		3,154		218		2,396
State		501		163		291
		3,655		381		2,687
Income tax expense	$	21,406	$	20,113	$	20,428

The differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for continuing operations were as follows for the years ended December 31:

	2014			2013			2012
U.S federal statutory rate		35.0 %			35.0 %			35.0 %
State income taxes, net of U.S. federal income tax expense		3.6			3.5			3.8
Provision to return adjustments, net		0.2			(0.3	)		(0.2	)
Domestic production/manufacturing deduction		(2.3	)		(2.0	)		(2.0	)
Non-deductible meals and entertainment		0.4			0.4			0.4
Research and development credit		—			—			(0.1	)
Other, net		—			0.1			0.5
Effective rate		36.9 %			36.7 %			37.4 %

The net deferred tax assets and (liabilities) arising from temporary differences was as follows at December 31:

(in thousands)	2014			2013
Deferred income tax assets:
Self insurance reserves	$	8,369		$	8,643
Contract loss reserves		72			435
Stock-based awards		4,420			4,245
Bonus		2,578			2,884
Other		886			2,588
Total deferred income tax assets		16,325			18,795
Deferred income tax liabilities:
Property and equipment – tax over book depreciation		(25,350	)		(24,037	)
Intangible assets – tax over book amortization		(3,799	)		(3,927	)
Total deferred income tax liabilities		(29,149	)		(27,964	)
Net deferred income taxes	$	(12,824	)	$	(9,169	)

The balance sheet classification of deferred income taxes is as follows:

(in thousands)	2014			2013
Current deferred income tax assets	$	11,905		$	14,550
Non-current deferred income tax liabilities		(24,729	)		(23,719	)
	$	(12,824	)	$	(9,169	)

The Company is subject to taxation in various jurisdictions. The Company is subject to examination by U.S. federal authorities for the open tax years (2011 through 2013) and by various state authorities for the years 2010 through 2013.

The Company has recorded a liability for unrecognized tax benefits related to tax positions taken on its various income tax returns. If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods. The Company anticipates that total unrecognized tax benefits will be reduced within the next 12 months due to the lapses in the applicable statutes of limitations, as well as pending federal tax settlements for the two years under examination. The adjustment related to these items is estimated at approximately $0.2 million.

The following is a reconciliation of the beginning and ending liability for unrecognized tax benefits at December 31:

(in thousands)	2014			2013
Balance at beginning of period	$	657		$	655
Gross increases in current period tax positions		93			132
Gross increases in prior period tax positions		—			55
Gross decreases in prior period tax positions		(243	)		(185	)
Balance at end of period		507			657
Accrued interest and penalties at end of period		223			189
Total liability for unrecognized tax benefits	$	730		$	846

The liability for unrecognized tax benefits, including accrued interest and penalties, was included in other liabilities in the accompanying consolidated balance sheets. The amount of interest and penalties charged or credited to income tax expense as a result of the unrecognized tax benefits was not significant in both of the years ended December 31, 2014 and 2013 and were $0.2 million for the year ended December 31 2012.