NOTE 7. Income Taxes

The following is a reconciliation of our effective tax rate to the federal statutory tax rate:

	Years Ended December 31,
	2015				2014			2013
U.S. federal statutory rate		35.0		%		35.0	%		35.0		%
State taxes, net of federal benefit		2.4			2.9			3.2
State incentives		(0.5	)		(0.8)				(0.6	)
State law changes		(0.9	)		(0.9)			0.1
Nondeductible expenses		0.4			0.9			0.8
Other		-			(0.1)			0.1
Net effective rate		36.4		%		37.0	%		38.6		%

The following is a summary of our provision for income taxes (in thousands):

	Years Ended December 31,
	2015			2014			2013
Current
Federal	$	21,363		$	5,939		$	22,880
State and local		2,900			445			3,817
Foreign		284			249			205
		24,547			6,633			26,902

Deferred
Federal		16,538			23,600			15,920
State and local		(346	)		191			627
Foreign		(106	)		(115	)		(4	)
		16,086			23,676			16,543

Total provision	$	40,633		$	30,309		$	43,445

The following is a summary of our deferred tax assets and liabilities (in thousands):

	December 31,
	2015			2014
Reserve for uncollectible accounts receivable	$	1,672		$	2,101
Accrued compensation		11,436			7,161
Other reserves		3,245			2,036
Current deferred tax assets		16,353			11,298

Accrued compensation		7,012			6,829
Other reserves		659			764
Operating loss carryforwards		1,914			1,387
Less valuation allowance		(108	)		(108	)
Non-current deferred tax assets		9,477			8,872
Total deferred tax assets	$	25,830		$	20,170

Prepaids	$	(3,448	)	$	(1,551	)
Other receivables		(4,493	)		(4,931	)
Current deferred tax liabilities		(7,941	)		(6,482	)

Property and equipment		(87,148	)		(67,726	)
Goodwill		(82,511	)		(81,647	)
Non-current deferred tax liabilities		(169,659	)		(149,373	)
Total deferred tax liabilities	$	(177,600	)	$	(155,855	)

We are subject to income taxation in the U.S., numerous state jurisdictions, Mexico and Canada. Because income tax return formats vary among the states, we file both unitary and separate company state income tax returns. Our state tax net operating losses of $1.9 million expire between December 31, 2016 and December 31, 2035. Management believes it is more likely than not that the deferred tax assets will be realized with the exception of $0.1 million related to state tax net operating losses for which a valuation allowance has been established.

As of December 31, 2015 and December 31, 2014, the amount of unrecognized tax benefits was consistent at $1.1 million. Of these amounts, our income tax provision would decrease $0.7 million for each year, if recognized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 1, 2014	$	459
Additions for tax positions taken in prior years		231
Additions for tax positions related to the current year		587
Reductions as a result of a lapse of the applicable statute of limitations		(212	)
Balance at December 31, 2014	$	1,065
Additions for tax positions taken in prior years		166
Additions for tax positions related to the current year		153
Reductions as a result of a lapse of the applicable statute of limitations		(245	)
Balance at December 31, 2015	$	1,139

We estimate it is reasonably possible that our reserve could either increase or decrease by $0.3 million during the next twelve months.

We recognize interest expense and penalties related to income tax liabilities in our provision for income taxes. In our 2015 provision for income taxes we recognized approximately two thousand five hundred dollars of net interest income from income tax refunds partially offset by expense from income tax penalties.

Our most recent IRS examination reviewed our 2011 and 2012 tax years and closed in 2014 with no changes. No material examinations took place in 2015. Although no material examinations are currently in effect, tax years 2012 through 2014 generally remain open to examination by the major tax jurisdictions to which we are subject.