Income Taxes

Income tax expense for the six months ended June 30, 2015 and 2014 differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. The sources and tax effects of the differences are as follows:



	Six Months Ended June 30,
	2015		2014
U.S. federal statutory tax rate	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.5		1.8
General business credits	(1.1	)	(1.1	)
Employee stock-based compensation	1.0		1.1
Other	1.3		0.6
Effective tax rate	38.7	%	37.4	%

The effective tax rate for the
six months ended June 30, 2015 and 2014 differs from the statutory federal income tax rate of 35% primarily due to state income taxes, net of federal tax benefit, general business credits and non-deductible employee stock based compensation. The increase in the effective tax rate for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014 is primarily attributable to increased earnings in states that have higher statutory tax rates.

We establish a valuation allowance when we consider it more-likely-than-not that some portion or all of the deferred tax assets will not be realized. As of June 30, 2015 and June 30, 2014, we did not have a valuation allowance on any of our deferred tax assets as we believed it was more-likely-than-not that we would realize the benefits of our deferred tax assets.

We are subject to examination by the Internal Revenue Service, or IRS, and various state tax authorities. Our consolidated federal income tax returns for the five-months ended December 31, 2009 and the years ended December 31, 2010 and 2011 are currently under examination by the IRS. We remain subject to examination of our federal income tax return for the years ended December 31, 2012 and 2013. We generally remain subject to examination of our various state income tax returns for a period of four to five years from the respective dates the returns were filed.

As of June 30, 2015, we have net operating loss carryforwards of approximately $46.8 million and $40.3 million for federal and state tax purposes, respectively, which will be available to offset future income. If not used, these carryforwards will expire between 2025 and 2034. In addition, we have state business tax credits of approximately $4.1 million that will expire between 2028 and 2034 and other state business tax credits of approximately $1.4 million that will expire 2024.

As of June 30, 2015 and 2014, we had a liability of $7.0 million and $4.4 million, respectively, for unrecognized tax benefits related to various federal and state income tax matters excluding interest, penalties and related tax benefits. The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is as follows:

Note 10—Income Taxes (continued)



	Six Months Ended June 30,
	2015		2014
	(In thousands)
Beginning balance	$	6,190	$	3,724
Increases related to positions taken during the current year	854		676
Ending balance	$	7,044	$	4,400

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate	$	7,044	$	4,400

We recognized accrued interest and penalties related to unrecognized tax benefits as of both June 30, 2015 and 2014, of approximately $0.3 million.