lowing is a reconciliation of the U.S. statutory federal income tax rate with our effective income tax rate for continuing operations:



	Year Ended December 31,
	2014		2013		2012
U.S. statutory income tax rate	35.0	%	35.0	%	35.0	%
State tax, net of U.S. federal tax benefit	2.5		2.9		1.1
Non-U.S. income taxes	(0.3	)	1.2		—
Nondeductible operating expenses	0.2		(0.4	)	0.4
Research and development credit	(2.4	)	(0.7	)	—
Change in deferred tax measurement rate	0.1		0.2		0.1
Change in uncertain tax positions	1.5		2.2		(6.5	)
Expiration of capital loss carryforward	—		26.9		—
Change in valuation allowance	(4.1	)	(267.6	)	(32.3	)
Other	0.1		0.2		—
Effective income tax rate	32.6	%	(200.1	)%	(2.2	)%

Deferred Income Taxes

Individually significant components of deferred income tax assets (liabilities) were as follows (in thousands):



	December 31,
	2014			2013
Deferred income tax assets:
Accrued liabilities	$	3,510		$	3,230
Allowance for doubtful accounts	33			20
Inventory valuation	377			312
Capitalized indirect inventory costs	295			159
Stock-based compensation expense	558			376
Net operating loss carryforward	19,742			35,635
Basis difference on long-lived assets	3,289			4,412
Credit carryforward	4,565			3,422
Other	339			332
Gross deferred income tax assets	32,708			47,898
Valuation allowance	(6,156		)	(12,944		)
Deferred income tax assets, net of valuation allowance	26,552			34,954
Deferred income tax liabilities:
Prepaid advertising	(467		)	(793		)
Other prepaids	(696		)	(592		)
Basis difference on long-lived assets	(3,355		)	(2,938		)
Undistributed earnings of foreign subsidiaries	(179		)	(177		)
Other	(1		)	(288		)
Deferred income tax liabilities	(4,698		)	(4,788		)
Net deferred income tax asset	$	21,854		$	30,166

Our net deferred income tax asset (liability) was recorded on our Consolidated Balance Sheets as follows (in thousands):



	December 31,
	2014			2013
Current deferred income tax assets	$	12,368		$	4,441
Non-current deferred income tax assets	9,546			25,725
Other long-term liabilities	(60		)	—
Net deferred income tax asset	$	21,854		$	30,166

The table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2014 and 2013, that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting. Instead, equity will be increased by $0.8 million if and when such deferred tax assets are ultimately realized. We use tax law ordering when determining when excess tax benefits have been realized.

We account for income taxes based on the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. We have recorded a valuation allowance to reduce our deferred income tax assets to the amount we believe is more likely than not to be realized. Evaluating the need for, and amount of, a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence on a jurisdiction-by-jurisdiction basis. Such judgments require us to interpret existing tax law and other published guidance as applied to our circumstances. As part of this assessment, we consider both positive and negative evidence. The weight given to the potential effect of positive and negative evidence must be commensurate with the extent to which the strength of the evidence can be objectively verified.

During 2008, we determined that it was no longer more likely than not that the tax benefits from the existing U.S. deferred tax assets would be realized due to the substantial amount of the cumulative accounting losses realized in the recent years in the U.S. and the large taxable losses incurred in the U.S. in 2007 and 2008. Accordingly, we established a full valuation allowance against our U.S. net deferred tax assets in 2008.

Each quarter, we assess the total weight of positive and negative evidence including cumulative income or loss for the past three years and forecasted taxable income and re-evaluate whether any adjustments or release of all or any portion of valuation allowance is appropriate. As a result of this evaluation, in the second quarter of 2013, we concluded that a majority of the existing valuation allowance on our domestic deferred income tax assets was no longer required, accordingly, a tax benefit of $38.9 million was recorded during 2013 related to the reduction of our existing valuation allowance. Further in the fourth quarter of 2014, after re-evaluating the potential realization of the remainder of our deferred income tax assets, we concluded that, as of December 31, 2014, a portion of the existing valuation allowance against state net operating loss deferred tax assets was no longer necessary. Accordingly, an income tax benefit of $1.2 million was recorded in the fourth quarter of 2014 related to the reduction of our existing valuation allowance.

As of December 31, 2014, we have a valuation allowance against net deferred income tax assets of $6.2 million. Of the remaining valuation allowance, $2.9 million primarily relates to domestic credit carryforwards as we currently do not anticipate to generate the income of appropriate character to utilize those credits. The remainder, $3.3 million relates to foreign net operating loss carryfowards. Should it be determined in the future that it is more likely than not that our domestic deferred income tax assets will be realized, an additional valuation allowance would be released during the period in which such an assessment is made. There have been no material changes to our foreign operations since December 31, 2013 and, accordingly, we maintain our existing valuation allowance on foreign deferred income tax assets in such jurisdictions at December 31, 2014.

Income Tax Carryforwards

As of December 31, 2014, we had the following income tax carryforwards (in millions):



	Amount		Expires in
Net operating loss carryforwards
U.S. Federal	$	37.2	2029 - 2031
U.S. State	85.3		2015 - 2031
Switzerland	15.0		2015 - 2020
Italy	1.2		2015 - 2017
Income tax credit carryforwards
U.S. Federal	3.6		2018 - 2034
U.S. State	0.4		2019 - 2022

The timing and manner in which we are permitted to utilize our net operating loss carryforwards may be limited by Internal Revenue Code Section 382, Limitation on Net Operating Loss Carry-forwards and Certain Built-in-Losses Following Ownership Change.

Unrecognized Tax Benefits

Following is a reconciliation of gross unrecognized tax benefits from uncertain tax positions, excluding the impact of penalties and interest (in thousands):



	2014			2013			2012
Unrecognized tax benefits, January 1	$	1,964		$	2,530		$	4,376
Additions for tax positions taken in prior years	72			166			—
Reductions for tax positions taken in prior years	—			(472		)	(972		)
Additions for tax positions related to the current year	821			54			—
Lapses of statutes of limitations	(89		)	(314		)	(874		)
Unrecognized tax benefits, December 31	$	2,768		$	1,964		$	2,530

Of the $2.8 million of gross unrecognized tax benefits from uncertain tax positions outstanding as of December 31, 2014, $2.5 million would affect our effective tax rate if recognized.

We recognize tax-related interest and penalties as a component of income tax provision. We recorded such tax-related interest and penalties of $0.4 million, $0.0 million and $0.1 million in 2014, 2013 and 2012, respectively. We had a cumulative liability for interest and penalties related to uncertain tax positions as of December 31, 2014 and 2013 of $2.0 million and $1.6 million, respectively.

Our U.S. federal income tax returns for 2009 through 2014 are open to review by the U.S. Internal Revenue Service. Our state income tax returns for 2006 through 2014 are open to review, depending on the respective statute of limitation in each state. In addition, we file income tax returns in several non-U.S. jurisdictions with varying statutes of limitation.

As of December 31, 2014, we believe it is reasonably likely that, within the next 12 months, $0.3 million of the previously unrecognized tax benefits related to certain non-U.S. filing positions will be recognized as we anticipate the deregistration of certain foreign subsidiaries.