11. INCOME TAXES

VAALCO and its domestic subsidiaries file a consolidated United States income tax return. Certain subsidiaries’ operations are also subject to foreign income taxes.

Provision for income taxes consists of the following:

 

The primary differences between the financial statement and tax bases of assets and liabilities resulted in deferred tax assets at December 31, 2015 and 2014 are as follows:

 

Foreign tax credits will start to expire between the years 2017 and 2025. The alternative minimum tax credits do not expire, and foreign net operating losses (“NOLs”) are not subject to expiry dates. The NOL for our United Kingdom subsidiary can be carried forward indefinitely, while the NOLs for our Gabon and Angola subsidiaries are included in the respective subsidiaries’ cost oil accounts, which will be offset against future taxable revenues. The U.S federal NOL can be carried forward until 2035. Management assesses the available positive and negative evidence to estimate if existing deferred tax assets will be utilized. We do not anticipate utilization of the foreign tax credits prior to expiration nor do we expect to generate sufficient taxable income to utilize other deferred tax assets. On the basis of this evaluation, valuation allowances of $245.8 million, $166.1 million and $137.3 million have been recorded as of December 31, 2015, 2014 and 2013. Valuation allowances reduce the deferred tax asset to the amount that is more likely than not to be realized.

As a result of activity in the U.S. in 2015, a full valuation allowance was recorded related to AMT credits and our expectation that these credits will not be utilized in the foreseeable future.

Income (loss) before income taxes is attributable as follows:

 

The reconciliation to the U.S. statutory rate is as follows:

 

At December 31, 2015, 2014 and 2013, we were subject to foreign and U.S. federal taxes only, with no allocations made to state and local taxes. The following table summarizes the tax years that remain subject to examination by major tax jurisdictions: