Income Taxes

The components of income before provision for income taxes were as follows for the years ended December 31, 2016, 2015 and 2014 (in thousands):



	2016		2015		2014
U.S.	$	273,176	$	233,247	$	408,391
Foreign	186,270		223,377		71,385
Income before provision for income taxes	$	459,446	$	456,624	$	479,776

The provision for income taxes consisted of the following for the years ended December 31, 2016, 2015 and 2014 (in thousands):



	2016			2015			2014
Current tax provision (benefit):
Federal	$	89,816		$	70,298		$	153,471
State	6,238			(1,750		)	4,978
Foreign	39,952			62,572			13,259
Deferred tax provision (benefit):
Federal	4,265			23,381			(13,073		)
State	(86		)	(742		)	(15,220		)
Foreign	3,916			(18,536		)	2,442
Change in valuation allowance	(787		)	(5		)	(29		)
Total	$	143,314		$	135,218		$	145,828

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 $9.1 million, $15.5 million and $24.3 million in the years ended December 31, 2016, 2015 and 2014, respectively.

The Company’s effective rate differed from the U.S. federal statutory rate as follows for the years ended December 31, 2016, 2015 and 2014:



	2016		2015		2014
U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
State taxes	2.0		1.7		2.3
Nondeductible stock-based compensation	2.3		1.9		1.4
U.S. federal, state and foreign research and development credits	(3.3	)	(4.1	)	(3.2	)
Foreign earnings	(3.4	)	(4.6	)	(1.9	)
Domestic production activities deduction	(1.7	)	(1.2	)	(2.2	)
State software development activities benefit	—		—		(2.4	)
Other	0.3		0.9		1.4
	31.2	%	29.6	%	30.4	%

The components of the net deferred tax assets and liabilities and the related valuation allowance as of December 31, 2016 and 2015 were as follows (in thousands):



	2016			2015
Accrued bonus	$	18,390		$	13,161
Deferred revenue	10,055			11,334
Deferred rent	12,592			13,224
Stock-based compensation	32,030			31,705
Net operating losses	7,855			8,855
Unrealized losses	1,862			1,421
Tax credit carryforwards	23,629			22,918
License income	16,932			—
Other	7,048			5,989
Deferred tax assets	130,393			108,607
Depreciation and amortization	(10,470		)	(10,848		)
Acquired intangible assets	(44,788		)	(37,923		)
Internal-use software development costs capitalized	(77,375		)	(66,807		)
Deferred tax liabilities	(132,633		)	(115,578		)
Valuation allowance	(430		)	(1,217		)
Net deferred tax liabilities	$	(2,670	)	$	(8,188	)

During the years ended December 31, 2016 and 2015, the valuation allowance related to the Company's deferred tax assets decreased by an insignificant amount. As of December 31, 2016 and 2015, the Company had the following NOL and credit carryforwards (in thousands, except for years):



	2016		2015		Expirations at Various Dates Through:
NOL carryforwards:
Federal	$	16,500	$	21,500	2029
State	11,400		28,200		2034
Foreign	—		—
Federal and state research and development tax credit carryforwards	41,500		39,800		2031

The Company's U.S. federal NOL carryforwards relate to acquisitions completed during 2012. As of December 31, 2016, the Company had no foreign tax credit carryforwards.

As of December 31, 2016, undistributed earnings of non-U.S. subsidiaries totaled $470.4 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 $89.4 million.

The following is a rollforward of the Company’s unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014 (in thousands):



	2016			2015			2014
Balance at beginning of year	$	65,290		$	33,320		$	24,651
Gross increases — tax positions of prior periods	6,391			11,238			12,925
Gross increases — current-period tax positions	6,252			27,043			2,106
Gross decreases — tax positions of prior periods	(6,778		)	(5,996		)	(6,362		)
Gross decreases — settlements	(2,038		)	(315		)	—
Balance at end of year	$	69,117		$	65,290		$	33,320

As of December 31, 2016, 2015 and 2014, the Company had approximately $77.1 million, $72.3 million and $41.1 million, respectively, of total unrecognized tax benefits, including $13.7 million, $10.0 million, and $7.7 million of accrued interest and penalties as of December 31, 2016, 2015 and 2014, respectively. Interest and penalties related to unrecognized tax benefits are recorded in the provision for income taxes and were $3.9 million, $2.2 million and $1.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. If recognized, the aggregate amount of unrecognized tax benefits would have resulted in a reduction of income tax expense, impacting the effective income tax rate.

As of December 31, 2016, the Company believes it is reasonably possible that $15.8 million of its unrecognized tax benefits may be recognized by the end of 2017 as a result of the expiration of local statutes of limitations. Certain state and foreign income tax returns from 2011 through 2014 are currently under audit in those jurisdictions, including an audit in the Commonwealth of Massachusetts. The Company has reserved for those positions that are not more likely than not of being sustained.

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 2012 are open for examination.