9. Income Taxes

The components of the Company’s loss from continuing operations before income taxes, equity in affiliates and noncontrolling interests by taxing jurisdiction for the years ended December 31, were:


	2013			2012			2011
Loss:
US	$	21,242		$	(36,660	)	$	(17,460	)
Non-US		(156,832	)		(26,315	)		(15,181	)
	$	(135,590	)	$	(62,975	)	$	(32,641	)

The provision (benefit) for income taxes by taxing jurisdiction for the years ended December 31, were:


	2013			2012		2011
Current tax provision
US federal	$	—		$	—	$	—
US state and local		213			802		894
Non-US		923			329		557
		1,136			1,131		1,451
Deferred tax provision (recovery):
US federal		7,505			2,150		45,110
US state and local		1,027			299		7,750
Non-US		(13,959	)		5,973		(12,576	)
		(5,427	)		8,422		40,284
Income tax provision (recovery)	$	(4,291	)	$	9,553	$	41,735

A reconciliation of income tax expense (recovery) using the statutory Canadian federal and provincial income tax rate compared with actual income tax expense for the years ended December 31, is as follows:


	2013			2012			2011
Loss from continuing operations before income taxes, equity in affiliates and noncontrolling interest	$	(135,590	)	$	(62,975	)	$	(32,641	)
Statutory income tax rate		26.5	%		26.5	%		31.0	%
Tax benefit using statutory income tax rate		(35,931	)		(16,688	)		(10,119	)
State and foreign taxes		1,136			1,131			1,451
Non-deductible stock-based compensation		24,357			7,699			7,143
Other non-deductible expense		942			1,176			1,482
Change to valuation allowance on items affecting taxable income		6,952			15,682			44,554
Effect of the change in tax rate		—			2,168			—
Noncontrolling interests		(1,712	)		(1,593	)		(2,368	)
Other, net		(35	)		(22	)		(408	)
Income tax expense (recovery)	$	(4,291	)	$	9,553		$	41,735
Effective income tax rate		(3.2	)%		15.2	%		127.9	%

See Note 10 for income taxes for discontinued operations.

The 2013 effective income tax rate was significantly lower than the statutory rate due primarily to non-deductible stock based compensation of $24,357, and an increase in the valuation allowance of $6,952.

The 2012 effective income tax rate was significantly higher than the statutory rate due primarily to an increase in the valuation allowance of $16,240 and non-deductible stock based compensation of $7,699.

The 2011 effective income tax rate was significantly higher than the statutory rate due primarily to an increase in the valuation allowance of $44,230 and non-deductible stock based compensation of $7,143.

Income taxes receivable were $533 and $195 at December 31, 2013 and 2012, respectively, and were included in accounts receivable on the balance sheet. Income taxes payable were $4,907 and $4,725 at December 31, 2013 and 2012, respectively, and were included in accrued and other liabilities on the balance sheet. It is the Company’s policy to classify interest and penalties arising in connection with the under payment of income taxes as a component of income tax expense. For the years ended 2013, 2012 and 2011, income tax expense does not include any amounts for interest and penalties.

The tax effects of significant temporary differences representing deferred tax assets and liabilities at December 31, were as follows:


	2013			2012
Deferred tax assets:
Capital assets and other	$	36,449		$	34,563
Net operating loss carry forwards		41,947			43,280
Interest deductions		21,753			19,285
Refinancing charge		10,153			—
Deferred acquisition consideration		26,779			21,418
Stock compensation		1,433			2,317
Pension plan		—			2,168
Unrealized foreign exchange		2,372			843
Capital loss carry forwards		16,180			17,408
Accounting reserves		4,769			4,721
Gross deferred tax asset		161,835			146,003
Less: valuation allowance		(137,961	)		(134,761	)
Net deferred tax assets		23,874			11,242
Deferred tax liabilities:
Pension plan		(1,112	)		—
Deferred finance charges		(420	)		(449	)
Capital assets		(178	)		(348	)
Goodwill amortization		(61,859	)		(53,875	)
Total deferred tax liabilities		(63,569	)		(54,672	)
Net deferred tax asset (liability)	$	(39,695	)	$	(43,430	)
Disclosed as:
Deferred tax assets	$	23,380		$	9,637
Deferred tax liabilities		(63,075	)		(53,067	)
	$	(39,695	)	$	(43,430	)

Included in accrued and other liabilities at December 31, 2013 and 2012 is a deferred tax liability of $55 and $49, respectively. Included in other current assets at December 31, 2013 and 2012 is a deferred tax asset of $2,249 and $305, respectively.

The Company has US federal net operating loss carry forwards of $60,525 and non-US net operating loss carry forwards of $44,383, these carry forwards expire in years 2015 through 2031. The Company also has total indefinite loss carry forwards of $162,396. These indefinite loss carry forwards consist of $58,006 relating to the US and $104,390 which are related to capital losses from the Canadian operations. In addition, the Company has net operating loss carry forwards for various state taxing jurisdictions of approximately $158,867.

The Company records a valuation allowance against deferred income tax assets when management believes it is more likely than not that some portion or all of the deferred income tax assets will not be realized. Management considers factors such as the reversal of deferred income tax liabilities, projected future taxable income, the character of the income tax asset; tax planning strategies, changes in tax laws and other factors. A change to these factors could impact the estimated valuation allowance and income tax expense.

The valuation allowance has been recorded to reduce our deferred tax asset to an amount that is more likely than not to be realized, and is based upon the uncertainty of the realization of certain US, non-US and state deferred tax assets. The increase in the Company’s valuation allowance charged to the statement of operations for each of the years ended December 31, 2013, 2012 and 2011 was $6,952, $16,240 and $44,230, respectively. In addition, expense of $1,112 and a benefit of $2,168 has been recorded in accumulated other comprehensive loss relating to the defined pension plan, for the year ended December 31, 2013 and 2012, respectively.

Deferred taxes are not provided for temporary differences representing earnings of subsidiaries that are intended to be permanently reinvested. The potential deferred tax liability associated with these undistributed earnings is not material.

As of December 31, 2013 and 2012, the Company recorded a liability for unrecognized tax benefits as well as applicable penalties and interest in the amount of $4,166. The Company identified an uncertainty relating to the future tax deductibility of certain intercompany interest and fees, to the extent that such future benefit will be established, the resolution of this position will have no effect with respect to the financial statements.


Changes in the Company’s reserve is as follows:
Balance December 31, 2010	$	3,624
Charges to income tax expense		—
Balance December 31, 2011		3,624
Charges to income tax expense		—
Settlement of uncertainty		(551	)
Balance December 31, 2012		3,073
Charges to income tax expense		—
Balance December 31, 2013	$	3,073

We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

The Company has completed US federal tax audits through 2006 and has completed a non-US tax audit through 2004.