(5) INCOME TAXES

Income tax expense consisted of the following (in thousands):


	Years Ended December 31,
	2011		2010			2009
Current:
Federal	$	6,275	$	56,030		$	30,618
State		6,664		11,195			6,078
Foreign		1,347		894			649

		14,286		68,119			37,345

Deferred:
Federal		50,297		(8,523	)		5,605
State		7,566		(3,398	)		(697	)

		57,863		(11,921	)		4,908

Total income tax expense	$	72,149	$	56,198		$	42,253

The effective income tax rate differs from the federal corporate tax rate of 35% in 2011, 2010 and 2009 as follows (in thousands):


	Years Ended December 31,
	2011			2010			2009
Tax at statutory rate	$	61,217		$	47,683		$	34,593
State income taxes, net of federal tax benefits		9,250			5,068			3,498
Non-deductible meals and entertainment		2,571			2,943			3,558
Income tax credits		(1,517	)		(525	)		(480	)
Other, net		628			1,029			1,084

Total income tax expense	$	72,149		$	56,198		$	42,253

At December 31, deferred tax assets and liabilities consisted of the following (in thousands):


	December 31,
	2011		2010
Deferred tax assets:
Insurance and claims accruals	$	72,613	$	72,327
Allowance for uncollectible accounts		6,913		5,648
Other		8,382		7,087

Gross deferred tax assets		87,908		85,062


Deferred tax liabilities:
Property and equipment		295,429		238,416
Prepaid expenses		6,710		6,734
Other		2,964		2,590

Gross deferred tax liabilities		305,103		247,740

Net deferred tax liability	$	217,195	$	162,678

These amounts (in thousands) are presented in the accompanying Consolidated Balance Sheets as of December 31 as follows:


	December 31,
	2011		2010
Current deferred tax asset	$	25,805	$	27,829
Non-current deferred tax liability		243,000		190,507

Net deferred tax liability	$	217,195	$	162,678

We have not recorded a valuation allowance because we believe that all deferred tax assets are more likely than not to be realized as a result of our historical profitability, future taxable income and reversal of deferred tax liabilities.

We recognized (in thousands) a $2,159 increase in the net liability for unrecognized tax benefits for the year ended December 31, 2011 and a $259 increase for the year ended December 31, 2010. We accrued interest expense of $389 during 2011 and an interest benefit of $224 during 2010. Our total gross liability for unrecognized tax benefits at December 31, 2011 is $10,827 and at December 31, 2010 is $7,482. If recognized, $6,920 of unrecognized tax benefits as of December 31, 2011 and $4,761 as of December 31, 2010 would impact our effective tax rate. Interest of $3,384 as of December 31, 2011 and $2,995 as of December 31, 2010 has been reflected as a component of the total liability. We do not expect any other significant increases or decreases for uncertain tax positions during the next twelve months.

The reconciliations of beginning and ending gross balances of unrecognized tax benefits for 2011 and 2010 are shown below (in thousands).


	December 31,
	2011			2010
Unrecognized tax benefits, beginning balance	$	7,482		$	7,531
Gross increases – tax positions in prior period		2,184			268
Gross increases – current-period tax positions		1,219			311
Settlements		(58	)		(628	)

Unrecognized tax benefits, ending balance	$	10,827		$	7,482

We file U.S. federal income tax returns, as well as income tax returns in various states and several foreign jurisdictions. The years 2007 through 2010 are open for examination by the U.S. Internal Revenue Service ("IRS"), and various years are open for examination by state and foreign tax authorities. In May 2010, the IRS began an audit of the 2007 and 2008 tax years. State and foreign jurisdictional statutes of limitations generally range from three to four years.