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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Taxes |
Income Taxes | 13. 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 continued to record real property assets and a financing obligation of $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 years 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 was in a three year cumulative loss position at December 31, 2015 and expects to remain in this position in the near future. As a result of these facts, the Company recorded a full valuation allowance against its net deferred tax assets on November 1, 2013, excluding the reversal of deferred tax liabilities related to indefinite-lived assets. The valuation allowance recorded at December 31, 2013 included $599.9 million in deferred tax assets recorded in connection with the Spin-Off. The Company intends to continue to maintain a full 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, |  | 2015 |  | 2014 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Stock-based compensation expense |  | $ | 36,243 |  | $ | 44,458 |
Accrued expenses |  |  | 59,196 |  |  | 58,483 |
Intangibles |  |  | 11,590 |  |  | 38,959 |
Financing obligation to GLPI |  |  | 1,374,268 |  |  | 1,394,575 |
Unrecognized tax benefits |  |  | 9,858 |  |  | 10,837 |
Net operating losses |  |  | 81,109 |  |  | 11,895 |
Accumulated other comprehensive loss |  |  | — |  |  | 590 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Gross deferred tax assets |  |  | 1,572,264 |  |  | 1,559,797 |
Less valuation allowance |  |  | (844,258 | ) |  | (744,449 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  |  | 728,006 |  |  | 815,348 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: |  |  |  |  |  |  |
Property, plant and equipment, non-leased |  |  | (80,930 | ) |  | (61,803 | )
Property, plant and equipment, leased |  |  | (750,407 | ) |  | (787,580 | )
Investments in unconsolidated affiliates |  |  | (3,024 | ) |  | (4,255 | )
Accumulated other comprehensive gain |  |  | (1,566 | ) |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax liabilities |  |  | (835,927 | ) |  | (853,638 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Noncurrent deferred tax liabilities, net |  | $ | (107,921 | ) | $ | (38,290 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The realizability of the net deferred tax assets is evaluated quarterly by assessing the need for a valuation allowance and by adjusting the amount of the allowance, if necessary. The Company gives appropriate consideration to all available positive and negative evidence including projected future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. The evaluation of both positive and negative evidence is a requirement pursuant to ASC 740 in determining the net deferred tax assets will be realized. In the event the Company determines that the deferred income tax assets would be realized in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be recorded, which would reduce the provision for income taxes. Following the ownership change of the Tropicana Las Vegas on August 25, 2015, we acquired federal net operating loss carry-forwards and general business credit carryforwards in the amount of $190.9 million and $0.9 million, which will expire on various dates from 2029 through 2035. These tax attributes are subject to limitations under the Internal Revenue Code and underlying Treasury Regulations, however we believe it is more likely than not that the benefit from these tax attributes will not be realized. In the recognition of this risk, we have provided a full valuation allowance on the acquired deferred tax assets related to these net operating and general business credit carryforwards. In the event our assumptions change, which allows the Company to realize these acquired tax attributes, the benefits related to any reversal of the valuation allowance on the deferred tax assets as of December 31, 2015, will be recognized as a reduction of income tax expense. For state income tax reporting, the Company has gross state net operating loss carry-forwards aggregating approximately $202.0 million available to reduce future state income taxes, primarily for the Commonwealth of Pennsylvania and the States of Missouri, New Mexico and Ohio localities as of December 31, 2015. The tax benefit associated with these net operating loss carry-forwards is approximately $9.9 million. Due to statutorily limited operating loss carry-forwards and income and loss projections in the applicable jurisdictions, a full 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, 2016 to December 31, 2035. Also, certain subsidiaries have accumulated gross state net operating loss carry-forwards aggregating approximately $1.2 billion for which no benefit has been recorded as they are attributable to uncertain tax positions and excess tax benefits from stock option deductions. The unrecognized tax benefits as of December 31, 2015 attributable to these net operating losses was approximately $69.4 million. Due to the uncertain tax position and excess tax benefits from stock option deductions, these net operating losses are not included as components of deferred tax assets as of December 31, 2015. In the event of any benefit from realization of these net operating losses, $11.4 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, 2016 to December 31, 2035. Additionally, included in the Company's full valuation allowance is $2.3 million for federal capital losses that will expire if not used via the realization of capital gains by December 31, 2033. Overall the Company's valuation allowance at December 31, 2015 increased from December 31, 2014 by a net amount of $99.8 million primarily due to the acquired deferred tax assets related to the Tropicana's tax attributes of $68.2 million and other deferred tax assets during the year of $31.6 million. The provision for income taxes charged to operations for the years ended December 31, 2015, 2014 and 2013 was as follows:
Year ended December 31, |  | 2015 |  | 2014 |  | 2013 |
|  | (in thousands) |
Current tax (benefit) expense |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (5,158 | ) | $ | 14,275 |  | $ | 96,273 |
State |  |  | 133 |  |  | 5,821 |  |  | 2,835 |
Foreign |  |  | 3,713 |  |  | 7,515 |  |  | 4,708 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total current |  |  | (1,312 | ) |  | 27,611 |  |  | 103,816 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax expense (benefit) |  |  |  |  |  |  |  |  |  |
Federal |  |  | 51,817 |  |  | 2,357 |  |  | (137,803 | )
State |  |  | 5,419 |  |  | 551 |  |  | 407 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred |  |  | 57,236 |  |  | 2,908 |  |  | (137,396 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax provision (benefit) |  | $ | 55,924 |  | $ | 30,519 |  | $ | (33,580 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The following table reconciles the statutory federal income tax rate to the actual effective income tax rate for 2015, 2014 and 2013:
Year ended December 31, |  | 2015 |  | 2014 |  | 2013 |
Percent of pretax income |  |  |  |  |  |  |  |  |  |
Federal taxes |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local income taxes |  |  | 6.1 | % |  | 1.6 | % |  | 1.5 | %
Permanent differences |  |  | 5.8 | % |  | (20.9 | )% |  | (16.8 | )%
Foreign |  |  | 5.2 | % |  | (2.2 | )% |  | (0.6 | )%
Valuation allowance |  |  | 55.3 | % |  | (31.1 | )% |  | (14.0 | )%
Other miscellaneous items |  |  | (8.6 | )% |  | (2.3 | )% |  | 0.3 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 98.8 | % |  | (19.9 | )% |  | 5.4 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Year ended December 31, |  | 2015 |  | 2014 |  | 2013 |
|  | (in thousands) |
Amount of pretax income |  |  |  |  |  |  |  |  |  |
Federal taxes |  | $ | 19,814 |  | $ | (53,656 | ) | $ | (219,232 | )
State and local income taxes |  |  | 3,435 |  |  | (2,470 | ) |  | (9,163 | )
Permanent differences |  |  | 3,276 |  |  | 32,019 |  |  | 104,592 |
Foreign |  |  | 2,955 |  |  | 3,337 |  |  | 3,685 |
Valuation allowance |  |  | 31,288 |  |  | 47,703 |  |  | 92,242 |
Other miscellaneous items |  |  | (4,844 | ) |  | 3,586 |  |  | (5,704 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | 55,924 |  | $ | 30,519 |  | $ | (33,580 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
A reconciliation of the beginning and ending amount for the liability for unrecognized tax benefits is as follows:
|  | Unrecognized tax benefits |
|  | (in thousands) |
Unrecognized tax benefits |  | $ | 49,594 |
Cumulative advance deposits on account |  |  | (28,030 | )
​ | ​ | ​ | ​ | ​
Balance at December 31, 2013 |  | $ | 21,564 |
Additions based on current year positions |  |  | 1,142 |
Additions based on prior year positions |  |  | 4,038 |
Decreases due to settlements and/or reduction in reserves |  |  | (5,097 | )
Currency translation adjustments |  |  | (4,844 | )
Settlement payments |  |  | (356 | )
​ | ​ | ​ | ​ | ​
Unrecognized tax benefits |  |  | 44,477 |
Cumulative advance deposits on account |  |  | (37,441 | )
​ | ​ | ​ | ​ | ​
Balance at December 31, 2014 |  | $ | 7,036 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
Additions based on current year positions |  |  | 561 |
Additions based on prior year positions |  |  | 6,371 |
Decreases due to settlements and/or reduction in reserves |  |  | (4,743 | )
Currency translation adjustments |  |  | (9,097 | )
Settlement payments |  |  | (4,000 | )
​ | ​ | ​ | ​ | ​
Unrecognized tax benefits |  |  | 33,569 |
Cumulative advance deposits on account |  |  | (31,371 | )
​ | ​ | ​ | ​ | ​
Balance at December 31, 2015 |  | $ | 2,198 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
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, 2015, the Company recorded $0.6 million of tax reserves and accrued interest related to current year uncertain tax positions. In regards to prior year tax positions, the Company recorded $6.4 million of tax reserves and accrued interest and reversed $3.7 million and $1.0 million of previously recorded tax reserves and accrued interest, respectively, for uncertain tax positions that have settled and/or closed. The unrecognized tax benefits in the table above of $2.2 million for the year ended December 31, 2015 are recorded within our consolidated balance sheets as $4.0 million in other liabilities and $1.8 million in other assets. Overall, the Company recorded a net tax expense of $1.8 million in connection with its uncertain tax positions for the year ended December 31, 2015. Included in the liability for unrecognized tax benefits at December 31, 2015 and 2014 were $10.0 million and $10.7 million, respectively, of tax positions that, if reversed, may not affect the effective tax rate as a result of the Company's full valuation allowance. Included in the liability for unrecognized tax benefits at December 31, 2015 and 2014 were $3.0 million and $2.5 million of currency translation gains for foreign currency tax positions and advance deposits on account, respectively. During the years ended December 31, 2015 and 2014, the Company recognized approximately $1.4 million and $1.1 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 $0.7 million, net of deferred taxes. These accruals are included in noncurrent tax liabilities and prepaid expenses within the consolidated balance sheets at December 31, 2015 and 2014, 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. The Company anticipates that a payment of $4.0 million will be made by the end of 2016. As of December 31, 2015, the Company is subject to U.S. federal income tax examinations for the tax years 2012, 2013, and 2014. 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, 2015 and 2014, prepaid expenses within the consolidated balance sheets included prepaid income taxes of $48.9 million and $34.2 million, respectively.

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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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