Income Taxes

The components of the provision for income taxes are as follows:



	Year Ended December 31,
	2014		2013			2012
	(In Thousands)
Current:
U.S. federal	$	3,826	$	3,876		$	4,755
Foreign	525		344			87
State and local	137		1,061			1,301
Total current	4,488		5,281			6,143
Deferred:
U.S. federal	1,012		(7		)	(445		)
Foreign	—		2			—
State and local	963		(435		)	(40		)
Total deferred	1,975		(440		)	(485		)
Provision for income taxes	$	6,463	$	4,841		$	5,658

The reconciliation of income tax expense computed at the U.S. federal statutory rate to the income tax provision for the years ended December 31, 2014, 2013 and 2012 is as follows:



	Year Ended December 31,
	2014			2013			2012
	(In Thousands)
Income taxes at federal statutory rate	$	2,424		$	3,722		$	4,980
State income taxes, net of federal benefit	833			591			793
Sale of Ijie operations	1,404			—			—
Foreign taxes	714			(102		)	(44		)
Subpart F income	570			—			—
Income tax reserve	266			690			—
Nondeductible expenses	252			352			122
Provision for foreign unremitted earnings	221			—			—
Return to provision	51			(423		)	—
Domestic production activities deduction	(236		)	(264		)	(236		)
Other	(36		)	275			43
Provision for income taxes	$	6,463		$	4,841		$	5,658

The increase in the Company's effective tax rate in the current year was primarily attributable to the sale of the Company’s Ijie operations, higher non-deductible expenses and certain expired state tax attributes.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities consist of the following:



	Year Ended December 31,
	2014			2013
	(In Thousands)
Deferred tax assets:
Net operating loss and tax credit carryforwards	$	12,745		$	16,387
Allowance for doubtful accounts and other reserves	3,092			1,021
Deferred rent	2,392			2,891
Stock-based compensation	1,550			2,974
Other	1,121			978
Total deferred tax assets	20,900			24,251
Deferred tax liabilities:
Unremitted earnings	(221		)	—
Intangible assets	(165		)	(1,872		)
Property and equipment	(2,405		)	(1,867		)
Capitalized software costs	(1,947		)	(768		)
Total deferred tax liabilities	(4,738		)	(4,507		)
Total net deferred tax assets	$	16,162		$	19,744

As of December 31, 2014, the Company had net operating loss carryforwards of approximately $42.2 million for federal tax purposes, which are set to expire in years 2019 through 2026. The majority of this amount represents acquired tax loss carryforwards of WeddingChannel.com, which are subject to limitation on future utilization under Section 382 of the Internal Revenue Code of 1986. Section 382 imposes limitations on the availability of a company’s net operating losses after a more than 50 percentage point ownership change occurs over a 3 year period. It is estimated that the effect of Section 382 will generally limit the amount of the net operating loss carryforwards of WeddingChannel.com that is available to offset future taxable income to approximately $3.6 million annually. The overall determination of the annual loss limitation is subject to interpretation, and, therefore, the annual loss limitation could be subject to change.

The following is a reconciliation of the Company’s unrecognized tax benefits for 2014 and 2013:



	2014			2013
	(In Thousands)
Balances of unrecognized tax benefits as of January 1	$	5,093		$	4,403
(Decreases) increases for positions taken in prior years	(3,089		)	426
Increases for positions related to the current year	172			264
Balance of unrecognized tax benefits as of December 31	$	2,176		$	5,093

Of the total $2.2 million, approximately $0.9 million is presented within other long-term liabilities on the consolidated balance sheets. These unrecognized tax benefits would affect the Company's effective income tax rate, if and when recognized in future years. The remainder of the unrecognized tax benefits has been netted against the related deferred tax assets and, if recognized, would also be reported as a reduction of income tax expense. The Company does not presently anticipate such uncertain tax positions will significantly increase or decrease in the next twelve months; however, actual developments could differ from those currently expected.

The Company is subject to income tax in the United States and various foreign state and local jurisdictions. In 2013, the Company received notification that its New York state franchise tax returns would be audited for the years ended December 31, 2010 through December 31, 2012. This audit was completed during 2014 and resulted in no change in taxes due. The Company is subject to U.S. federal, state and local income tax examination for tax years 2011, 2012 and 2013; however, net operating losses utilized by the Company that were generated in prior years are subject to review.

The Company records interest and penalties as a component of income tax expense. For the years ended December 31, 2014 and 2013, the total interest and penalties included in the Company's tax provision was $30,000 and $0.2 million, respectively. For the year ended December 31, 2012, interest and penalties were immaterial. As of December 31, 2014 and 2013, the Company had $0.1 million of accrued interest and penalties related to accrued income taxes.

Following the sale of the Company’s Ijie operations, the Company determined that it will no longer permanently reinvest its foreign earnings and as a result the Company has recorded a deferred tax liability in the amount of $0.2 million as of December 31, 2014.