15. Income Taxes

The following table summarizes the tax effects of temporary differences between the financial statement carrying value of assets and liabilities and their respective tax basis, which are recorded at the prevailing enacted tax rate that will be in effect when these differences are settled or realized. These temporary differences result in taxable or deductible amounts in future years. The Company assessed all available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of our existing deferred tax assets. In connection with the failed spin-off-leaseback, the Company's real property assets associated with the Master Lease and the Company's financing obligation totaled $2.00 billion and $3.52 billion, respectively, on November 1, 2013, which resulted in a substantial increase to our net deferred tax assets of $599.9 million. ASC 740 suggests that additional scrutiny should be given to deferred taxes of an entity with cumulative pre-tax losses during the three most recent years and is widely considered significant negative evidence that is objective and verifiable and therefore, difficult to overcome. During the year ended December 31, 2014 and 2013, we had or expected to have cumulative pre-tax losses and considered this factor in our analysis of deferred taxes. Additionally, the Company expects to remain in a three year cumulative loss position in the near future. As a result of these facts, the Company has recorded a valuation allowance against its net deferred tax assets, excluding assets that can be realized based on our ability to carry back losses to recoup taxes previously paid and excluding the reversal of deferred tax liabilities related to indefinite-lived intangible assets. The $696.1 million valuation allowance recorded at December 31, 2013 includes $599.9 million recorded in connection with the Spin-Off. The Company intends to continue to maintain a valuation allowance on its net deferred tax assets until there is sufficient objectively verifiable positive evidence to support the realization of all or some portion of these deferred tax assets.

The components of the Company's deferred tax assets and liabilities are as follows:

Year ended December 31,	2014			2013
	(Restated)			(Restated)
	(in thousands)
Deferred tax assets:
Stock-based compensation expense	$	44,458		$	50,526
Accrued expenses		58,483			57,588
Intangibles		38,959			30,018
Master Lease financing obligation		1,394,575			1,375,952
Deferred tax assets resulting from unrecognized tax benefits		10,837			11,377
Net operating losses		11,895			7,392
Accumulated other comprehensive loss		590			1,844

Gross deferred tax assets		1,559,797			1,534,697
Less valuation allowance		(744,449	)		(696,064	)

Net deferred tax assets		815,348			838,633

Deferred tax liabilities:
Property, plant and equipment		(61,803	)		(80,065	)
Master Lease property		(787,580	)		(782,527	)
Investments in unconsolidated affiliates		(4,255	)		(5,779	)

Net deferred tax liabilities		(853,638	)		(868,371	)

Net:	$	(38,290	)	$	(29,738	)


Reflected on consolidated balance sheets:
Current deferred tax assets, net	$	40,343		$	41,414
Noncurrent deferred tax assets (liabilities), net		(78,633	)		(71,152	)

Net deferred taxes	$	(38,290	)	$	(29,738	)

For income tax reporting, the Company has gross state net operating loss carry-forwards aggregating approximately $184.6 million available to reduce future state income taxes, primarily for the Commonwealth of Pennsylvania and the States of Missouri, New Mexico and Ohio as of December 31, 2014. The tax benefit associated with these net operating loss carry-forwards is approximately $9.6 million. Due to statutorily limited operating loss carry-forwards and income and loss projections in the applicable jurisdictions, a valuation allowance has been recorded to reflect the net operating losses which are not presently expected to be realized. If not used, substantially all the carry-forwards will expire at various dates from December 31, 2015 to December 31, 2034.

Additionally, the Company has a valuation allowance in the amount of $2.4 million for federal capital losses that will expire if not used via the realization of capital gains by December 31, 2033.

In addition, certain subsidiaries have accumulated gross state net operating loss carry-forwards aggregating approximately $917.0 million for which no benefit has been recorded as they are attributable to uncertain tax positions. The unrecognized tax benefits as of December 31, 2014 attributable to these net operating losses was approximately $55.4 million. Due to the uncertain tax position, these net operating losses are not included as components of deferred tax assets as of December 31, 2014. In the event of any benefit from realization of these net operating losses, $11.5 million would be treated as an increase to equity, and the remainder would be treated as a reduction of tax expense. If not used, substantially all the carry-forwards will expire at various dates from December 31, 2015 to December 31, 2034.

The provision for income taxes charged to operations for the years ended December 31, 2014, 2013 and 2012 was as follows:

Year ended December 31,	2014		2013			2012
	(Restated)		(Restated)			(Restated)
	(in thousands)
Current tax expense (benefit)
Federal	$	14,275	$	96,273		$	84,281
State		5,821		2,835			12,145
Foreign		7,515		4,708			(3,366	)

Total current		27,611		103,816			93,060

Deferred tax (benefit) expense
Federal		2,357		(137,803	)		44,225
State		551		407			164

Total deferred		2,908		(137,396	)		44,389

Total income tax (benefit) provision	$	30,519	$	(33,580	)	$	137,449

The following table reconciles the statutory federal income tax rate to the actual effective income tax rate for 2014, 2013 and 2012:

Year ended December 31,	2014			2013			2012
	(Restated)			(Restated)			(Restated)
Percent of pretax (loss) income
Federal taxes		35.0	%		35.0	%		35.0	%
State and local income taxes		1.6	%		1.5	%		1.2	%
Permanent differences		(20.9	)%		(16.8	)%		5.9	%
Foreign		(2.2	)%		(0.6	)%		0.2	%
Valuation allowance		(31.1	)%		(14.0	)%		0.0	%
Other miscellaneous items		(2.3	)%		0.3	%		(0.1	)%

		(19.9	)%		5.4	%		42.2	%

Year ended December 31,	2014			2013			2012
	(Restated)			(Restated)			(Restated)
	(in thousands)
Amount based upon pretax (loss) income
Federal taxes	$	(53,656	)	$	(219,232	)	$	113,759
State and local income taxes		(2,470	)		(9,163	)		3,918
Permanent differences		32,019			104,592			19,193
Foreign		3,337			3,685			886
Valuation allowance		47,703			92,242			—
Other miscellaneous items		3,586			(5,704	)		(307	)

	$	30,519		$	(33,580	)	$	137,449

A reconciliation of the beginning and ending amount for the liability for unrecognized tax benefits is as follows:

	Noncurrent tax liabilities (Restated)
	(in thousands)
Balance at December 31, 2012	$	20,393
Additions based on current year positions		2,026
Additions based on prior year positions		5,537
Decreases due to settlements and/or reduction in reserves		(4,570	)
Currency translation adjustments		(1,822	)

Balance at December 31, 2013		21,564
Additions based on current year positions		1,142
Additions based on prior year positions		4,038
Payments made on account		(12,132	)
Decreases due to settlements and/or reduction in reserves		(5,097	)
Currency translation adjustments		(2,480	)

Balance at December 31, 2014	$	7,035

The Company is required under ASC 740 to disclose its accounting policy for classifying interest and penalties, the amount of interest and penalties charged to expense each period, as well as the cumulative amounts recorded in the consolidated balance sheets. The Company will continue to classify any income tax-related penalties and interest accrued related to unrecognized tax benefits in taxes on income within the consolidated statements of operations.

During the year ended December 31, 2014, the Company recorded $1.1 million of tax reserves and accrued interest related to current year uncertain tax positions. In regards to prior year tax positions, the Company recorded $4.0 million of tax reserves and accrued interest and reversed $4.8 million and $0.3 million of previously recorded tax reserves and accrued interest, respectively, for uncertain tax positions that have settled and/or closed. Overall, the Company recorded a net tax expense of $0.5 million in connection with its uncertain tax positions for the year ended December 31, 2014.

Included in the liability for unrecognized tax benefits at December 31, 2014 and 2013 were $10.7 million and $22.4 million, respectively, of tax positions that, if reversed, would affect the effective tax rate.

Included in the liability for unrecognized tax benefits at December 31, 2014 and 2013 were $2.5 million and $1.8 million of currency translation gains for foreign currency tax positions, respectively.

During the years ended December 31, 2014 and 2013, the Company recognized approximately $1.1million and $0.9 million, respectively, of interest and penalties, net of deferred taxes. In addition, due to settlements and/or reductions in previously recorded liabilities, the Company had reductions in previously accrued interest and penalties of $0.2 million, net of deferred taxes. These accruals are included in noncurrent tax liabilities and prepaid expenses within the consolidated balance sheets at December 31, 2014 and 2013, respectively.

The Company is currently in various stages of the examination process in connection with its open audits. Generally, it is difficult to determine when these examinations will be closed, but the Company reasonably expects that its ASC 740 liabilities will not significantly change over the next twelve months.

As of December 31, 2014, the Company is subject to U.S. federal income tax examinations for the tax years 2011, 2012, and 2013. In addition, the Company is subject to state and local income tax examinations for various tax years in the taxing jurisdictions in which the Company operates.

At December 31, 2014 and 2013, prepaid expenses within the consolidated balance sheets included prepaid income taxes of $34.2 million and $29.8 million, respectively.