12. Income Taxes

Components of the income tax provision applicable to federal, state and foreign income taxes for the years ended December 31, 2015, 2014 and 2013 are as follows (in thousands):

	2015			2014			2013
Federal income tax expense (benefit):
Current	$	(42,020	)	$	39,438		$	41,558
Deferred		(83,812	)		39,673			47,136
		(125,832	)		79,111			88,694
State income tax expense (benefit):
Current		(3,480	)		3,987			11,733
Deferred		(12,433	)		5,292			4,229
		(15,913	)		9,279			15,962
Foreign income tax expense (benefit):
Current		(2,590	)		4,521			4,572
Deferred		(3,628	)		(1,292	)		(796	)
		(6,218	)		3,229			3,776
Total income tax expense (benefit):
Current		(48,090	)		47,946			57,863
Deferred		(99,873	)		43,673			50,569
Total income tax expense (benefit):	$	(147,963	)	$	91,619		$	108,432

The difference between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2015, 2014 and 2013 is summarized as follows:

	2015			2014			2013
Statutory tax rate		35.0	%		35.0	%		35.0	%
State income taxes		2.1			2.5			3.7
Permanent differences		(1.3	)		(1.4	)		(1.5	)
Other differences, net		(2.4	)		(0.1	)		(0.6	)
Effective tax rate		33.4	%		36.0	%		36.6	%

The Domestic Production Activities Deduction (IRC section 199 deduction) was enacted as part of the American Jobs Creation Act of 2004 (as revised by the Emergency Economic Stabilization Act of 2008) and allows a deduction of 9% in 2010 and thereafter on the lesser of qualified production activities income or taxable income. The permanent differences for 2013 include a deduction of $10.0 million as the Company fully utilized its remaining net operating loss carryforwards. The permanent differences for 2014 include a deduction of $8.8 million. The permanent differences for 2015 do not include any deduction as it is limited to taxable income, and the Company did not have taxable income in 2015 as a result of the Company’s election to utilize bonus depreciation.

The 2015 other differences include a 1% reduction related to the reconciliation of the deferred tax liability associated with the conversion of the Company’s Canadian operations to a controlled foreign corporation. The impact to the deferred tax liability from the conversion is being amortized over the weighted average remaining useful life of the Canadian assets. The 2015 other differences also include a 0.7% reduction for the lost benefit of the 2014 IRC section 199 deduction of $8.8 million as a result of the Company’s adoption of the final tangible property regulations with the filing of the 2014 tax return.

The tax effect of significant temporary differences representing deferred tax assets and liabilities and changes therein were as follows (in thousands):

	December 31,			Net			December 31,			Net			December 31,			Net			December 31,
	2015			Change			2014			Change			2013			Change			2012
Deferred tax assets:
Current:
Net operating loss carryforwards	$	27,887		$	27,887		$	—		$	—		$	—		$	(18,914	)	$	18,914
Workers’ compensation allowance		28,734			424			28,310			698			27,612			2,534			25,078
Other		21,305			(1,091	)		22,396			2,749			19,647			(804	)		20,451
		77,926			27,220			50,706			3,447			47,259			(17,184	)		64,443
Non-current:
Net operating loss carryforwards		77,514			65,050			12,464			(988	)		13,452			1,690			11,762
Expense associated with employee stock options		14,591			205			14,386			(1,822	)		16,208			1,536			14,672
Federal benefit of state deferred tax liabilities		24,485			466			24,019			1,181			22,838			816			22,022
Other		20,441			4,394			16,047			1,344			14,703			(421	)		15,124
		137,031			70,115			66,916			(285	)		67,201			3,621			63,580
Less:
Allowance to reduce deferred tax asset to expected realizable value		(603	)		(603	)		—			—			—			—			—
Total deferred tax assets		214,354			96,732			117,622			3,162			114,460			(13,563	)		128,023
Deferred tax liabilities:
Current:
Other		(12,805	)		826			(13,631	)		676			(14,307	)		(2,823	)		(11,484	)
Non-current:
Property and equipment basis difference		(986,922	)		31			(986,953	)		(47,359	)		(939,594	)		(33,997	)		(905,597	)
Other		(13,339	)		2,284			(15,623	)		(152	)		(15,471	)		(186	)		(15,285	)
		(1,000,261	)		2,315			(1,002,576	)		(47,511	)		(955,065	)		(34,183	)		(920,882	)
Total deferred tax liabilities		(1,013,066	)		3,141			(1,016,207	)		(46,835	)		(969,372	)		(37,006	)		(932,366	)
Net deferred tax liability	$	(798,712	)	$	99,873		$	(898,585	)	$	(43,673	)	$	(854,912	)	$	(50,569	)	$	(804,343	)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized, and necessary allowances are provided. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company expects the carrying value of the deferred tax assets at December 31, 2015 and 2014 to be realized as a result of the reversal of existing taxable temporary differences giving rise to deferred tax liabilities and the generation of taxable income. The valuation allowance of $603,000 is related to state net operating losses being carried forward that will expire in 2016.

Other deferred tax assets consist primarily of the tax effect of various allowance accounts and tax-deferred expenses expected to generate future tax benefits of approximately $41.7 million. Other deferred tax liabilities consist primarily of the tax effect of receivables from insurance companies and tax-deferred income not yet recognized for tax purposes.

For income tax purposes, the Company has approximately $257 million of federal net operating losses and approximately $237 million, net of valuation allowance, of state net operating losses as of December 31, 2015. Of these amounts, approximately $111 million will be carried back to prior years and the remaining balance can be carried forward to future years. Net operating losses that can be carried forward, if unused, are scheduled to expire as follows: 2025—$2.8 million; 2026—$17.1 million; 2027—$75,000; 2029—$33.2 million; 2030—$27.5 million; 2031—$88.0 million; 2034—$2,000; 2035—$213.9 million.

As of December 31, 2015, the Company had no unrecognized tax benefits. The Company has established a policy to account for interest and penalties related to uncertain income tax positions as operating expenses. As of December 31, 2015, the tax years ended December 31, 2012 through December 31, 2014 are open for examination by U.S. taxing authorities. As of December 31, 2015, the tax years ended December 31, 2011 through December 31, 2014 are open for examination by Canadian taxing authorities.

On January 1, 2010, the Company converted its Canadian operations from a Canadian branch to a controlled foreign corporation for federal income tax purposes. This transaction triggered a $1.0 million increase in deferred tax liabilities, which is being amortized as an increase to deferred income tax expense over the weighted average remaining useful life of the Canadian assets. This will be fully amortized by December 31, 2016.

As a result of the above conversion, the Company’s Canadian assets are no longer directly subject to United States taxation, provided that the related unremitted earnings are permanently reinvested in Canada. Effective January 1, 2010, the Company has elected to permanently reinvest these unremitted earnings in Canada, and intends to do so for the foreseeable future. As a result, no deferred United States federal or state income taxes have been provided on such unremitted foreign earnings, which totaled approximately $28.4 million as of December 31, 2015. The unrecognized deferred tax liability associated with these earnings was approximately $3.8 million, net of available foreign tax credits. This liability would be recognized if the Company received a dividend of the unremitted earnings.