Income Taxes

The components of income before provision for income taxes were as follows for the years ended December 31, 2015, 2014 and 2013 (in thousands):



	2015		2014		2013
U.S.	$	233,247	$	408,391	$	365,821
Foreign	223,377		71,385		53,733
Income before provision for income taxes	$	456,624	$	479,776	$	419,554

The provision for income taxes consisted of the following for the years ended December 31, 2015, 2014 and 2013 (in thousands):



	2015			2014			2013
Current tax provision (benefit):
Federal	$	70,298		$	153,471		$	77,671
State	(1,750		)	4,978			8,034
Foreign	62,572			13,259			13,019
Deferred tax provision (benefit):
Federal	23,381			(13,073		)	24,210
State	(742		)	(15,220		)	(1,106		)
Foreign	(18,536		)	2,442			1,869
Change in valuation allowance	(5		)	(29		)	2,370
Total	$	135,218		$	145,828		$	126,067

The Company includes the provision for income taxes incurred on intercompany sales as part of its current tax provision. The amount of the current year provision for income taxes required to be deferred is included as a deferred tax benefit. The amount of the current year deferral included in the Company’s deferred tax provision was a benefit of $15.5 million and $24.3 million in the years ended December 31, 2015 and 2014, respectively. There were no amounts included in the deferred tax provision in 2013.

The Company’s effective rate differed from the U.S. federal statutory rate as follows for the years ended December 31, 2015, 2014 and 2013:



	2015		2014		2013
U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
State taxes	1.7		2.3		3.4
Nondeductible stock-based compensation	1.9		1.4		0.8
U.S. federal, state and foreign research and development credits	(4.1	)	(3.2	)	(3.5	)
Foreign earnings	(4.6	)	(1.9	)	(2.6	)
Domestic production activities deduction	(1.2	)	(2.2	)	(4.3	)
State software development activities benefit	—		(2.4	)	—
Other	0.9		1.4		1.2
	29.6	%	30.4	%	30.0	%

The components of the net deferred tax asset and the related valuation allowance as of December 31, 2015 and 2014 were as follows (in thousands):



	2015			2014
Accrued bonus	$	13,161		$	19,572
Deferred revenue	11,334			9,536
Deferred rent	13,224			10,518
Stock-based compensation	31,705			27,538
Net operating losses	8,855			11,466
Unrealized losses	1,421			748
Tax credit carryforwards	22,918			18,066
Other	5,989			6,528
Deferred tax assets	108,607			103,972
Depreciation and amortization	(10,848		)	(14,868		)
Acquired intangible assets	(37,923		)	(40,126		)
Internal-use software development costs capitalized	(66,807		)	(39,396		)
Deferred tax liabilities	(115,578		)	(94,390		)
Valuation allowance	(1,217		)	(1,222		)
Net deferred tax (liabilities) assets	$	(8,188	)	$	8,360

During the years ended December 31, 2015 and 2014, the valuation allowance related to the Company's deferred tax assets decreased by an insignificant amount. As of December 31, 2015 and 2014, the Company had the following NOL and credit carryforwards (in thousands):



	2015		2014		Expirations at Various Dates Through:
NOL carryforwards:
Federal	$	21,500	$	26,100	2029
State	28,200		45,000		2034
Foreign	—		300
Federal and state research and development tax credit carryforwards	39,800		30,500		2030

The Company's U.S. federal NOL carryforwards relate to acquisitions completed during 2012. As of December 31, 2015, the Company had no foreign tax credit carryforwards.

As of December 31, 2015, undistributed earnings of non-U.S. subsidiaries totaled $349.8 million. No provision for U.S. income and foreign withholding taxes has been made for these permanently reinvested foreign earnings because it is expected that such earnings will be reinvested indefinitely. If these earnings were distributed to the U.S. in the form of dividends or otherwise, it would be included in the Company's U.S. taxable income. The amount of unrecognized deferred income tax liability related to these earnings is $53.8 million.

The following is a rollforward of the Company’s unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 (in thousands):



	2015			2014			2013
Balance at beginning of year	$	33,320		$	24,651		$	20,902
Gross increases — tax positions of prior periods	11,238			12,925			2,878
Gross increases — current-period tax positions	27,043			2,106			2,834
Gross decreases — tax positions of prior periods	(5,996		)	(6,362		)	(1,213		)
Gross decreases — settlements	(315		)	—			(750		)
Balance at end of year	$	65,290		$	33,320		$	24,651

As of December 31, 2015, 2014 and 2013, the Company had approximately $72.3 million, $41.1 million and $30.6 million, respectively, of total unrecognized tax benefits, including $10.0 million, $7.7 million, and $5.9 million of accrued interest and penalties as of December 31, 2015, 2014 and 2013, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $2.2 million and $1.8 million for the years ended December 31, 2015 and 2014, respectively. Interest and penalties included in the provision for income taxes for the year ended December 31, 2013 were insignificant. If recognized, all amounts of unrecognized tax benefits would have resulted in a reduction of income tax expense, impacting the effective income tax rate. As of December 31, 2015, the Company does not expect to recognize any of its unrecognized tax benefits in earnings in the next 12 months.

The Company's U.S. federal income tax return for the 2013 tax year is currently under audit by the Internal Revenue Service. In addition, certain state and foreign income tax returns from 2008 through 2013 are currently under audit in those jurisdictions. The Company does not expect the results of these examinations to have a material effect on its financial condition, results of operations or cash flows.

Generally, in the U.S. federal and state taxing jurisdictions, tax periods in which certain loss and credit carryovers are generated remain open for audit until such time as the limitation period ends for the year in which such losses or credits are utilized. In major foreign jurisdictions, tax years after 2011 are open for examination.