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Income Taxes

12 Months Ended

Dec. 31, 2014

12.

Income Taxes

The income tax provision for the years ended December 31, 2012, 2013 and 2014 is summarized below (in thousands):

	2012			2013			2014
Current:
Federal	$	36,028		$	26,390		$	25,285
State		8,333			4,582			4,490
Total current		44,361			30,972			29,775
Deferred:
Federal		(608	)		(18,387	)		141
State		(708	)		(1,726	)		344
Total deferred		(1,316	)		(20,113	)		485
Total provision for income taxes	$	43,045		$	10,859		$	30,260

The tax effects of the principal temporary differences that give rise to the Company’s deferred tax assets are as follows as of December 31, 2013 and 2014 (in thousands):

	2013			2014
Tuition receivable	$	4,021		$	3,439
Other facility-related costs		3,684			2,824
Employee-related liabilities		144			(96	)
Current net deferred tax asset		7,849			6,167
Stock-based compensation		13,871			12,994
Property and equipment		(13,091	)		(11,622	)
Other facility-related costs		13,696			8,903
Deferred revenue		—			3,758
Deferred leasing costs		3,082			2,797
Interest rate swap		(18	)		(56	)
Other		(411	)		(533	)
Long-term net deferred tax asset		17,129			16,241
Net deferred tax asset	$	24,978		$	22,408

As of December 31, 2013 and 2014, the Company’s liabilities for unrecognized tax benefits are included in income taxes payable in the Consolidated Balance Sheets. Interest and penalties, including those related to uncertain tax positions, are included in the provision for income taxes in the Consolidated Statements of Income. The Company recognized $0.4 million of expense in 2013 and $0.1 million of benefits in 2014, related to interest and penalties. The total amount of interest and penalties included in the Consolidated Balance Sheets was $0.4 million and $0.3 million as of December 31, 2013 and 2014, respectively.

The following table summarizes changes in unrecognized tax benefits, excluding interest and penalties, for the respective periods (in thousands):

	Year Ended December 31,
	2013		2014
Beginning unrecognized tax benefits	$	—	$	1,745
Additions based on tax positions taken in the current year		1,745		2,085
Gross reductions for tax positions taken in prior years		—		(565	)
Settlements with taxing authorities		—		(329	)
Ending unrecognized tax benefits	$	1,745	$	2,936

It is reasonably possible that approximately $0.4 million of unrecognized tax benefits will be reduced in the next twelve months due to expiration of the applicable statutes of limitations. The Company does not anticipate significant changes to other unrecognized tax benefits.

As of December 31, 2014, $2.1 million of the Company’s total unrecognized tax benefits would favorably affect the Company’s effective tax rate if recognized. If amounts accrued are less than amounts ultimately assessed by taxing authorities, the Company would record additional income tax expense.

A reconciliation between the Company’s statutory tax rate and the effective tax rate for the years ended December 31, 2012, 2013, and 2014 is as follows:


Statutory federal rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefits	4.3		4.6		4.2
Other	0.2		0.2		0.3
Effective tax rate	39.5	%	39.8	%	39.5	%

Cash payments for income taxes were $47.4 million in 2012, $26.5 million in 2013, and $30.8 million in 2014.

- 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.

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