Note 10. Income Taxes

The components of income before income taxes by U.S. and foreign jurisdictions were as follows for the periods shown (in thousands):

	Fiscal Year Ended January 31,
	2015		2014		2013

United States	$	64,178	$	35,018	$	27,332
Foreign		3,008		3,482		1,761
Total	$	67,186	$	38,500	$	29,093

The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction.

Provision for income taxes for our fiscal years ended January 31, 2015, 2014 and 2013 consisted of the following (in thousands):

	Fiscal Year Ended January 31,
	2015			2014			2013
Current provision:
Federal	$	26,039		$	13,837		$	9,211
State		3,022			1,186			1,138
Foreign		2,093			1,644			600
Total	$	31,154		$	16,667		$	10,949
Deferred provision:
Federal		(3,421	)		(1,360	)		(616	)
State		(197	)		(94	)		(23	)
Foreign		(733	)		(328	)		—
Total	$	(4,351	)	$	(1,782	)	$	(639	)
Provision for income taxes	$	26,803		$	14,885		$	10,310

Provision for income taxes differed from the amount computed by applying the federal statutory income tax rate of 35%, to income before income taxes for our fiscal years ended January 31, 2015, 2014 and 2013, respectively, as a result of the following (in thousands):

	Fiscal Year Ended January 31,
	2015			2014			2013

Federal tax statutory tax rate	$	23,470		$	13,475		$	10,182
State taxes		1,429			904			880
Nondeductible expenses		140			55			80
Research and development credit		(2,028	)		(880	)		(351	)
Domestic manufacturing deduction		(431	)		(1,124	)		(699	)
Stock-based compensation		2,506			1,802			231
Foreign rate differential		1,101			(164	)		(50	)
Valuation allowance		1,589			512			(52	)
Others		(973	)		305			89
Provision for income taxes	$	26,803		$	14,885		$	10,310

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and liabilities as of January 31, 2015 and 2014 related to the following (in thousands):

	Fiscal Year Ended January 31,
	2015			2014
Deferred Tax Assets:
Accruals and reserves	$	4,974		$	2,357
Net operating loss carryforward		1,176			1,015
State income taxes		967			535
Tax credit carryforward		1,795			750
Other		521			—
Gross Deferred Tax Assets	$	9,433		$	4,657
Valuation Allowance		(2,304	)		(716	)
Total Deferred Tax Assets	$	7,129		$	3,941
Deferred Tax Liabilities:
Property and equipment	$	(193	)	$	(74	)
Intangible assets		(1,822	)		(2,448	)
Expensed internal-use software		(469	)		(606	)
Other		—			(436	)
Total Deferred Tax Liabilities	$	(2,484	)	$	(3,564	)
Net Deferred Tax Assets	$	4,645		$	377

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. As a result, a valuation allowance was assessed as it is not more likely than not that we will recognize the future benefits on the net California deferred tax asset balances. We expect to generate sufficient California research and development credits in the future to offset our future California State tax liability.

As of January 31, 2015, the net operating loss carryforwards for federal and state income tax purposes were approximately $2.0 million and $4.1 million, respectively. The federal net operating losses and the state net operating losses begin to expire in 2033.

As of January 31, 2015, we had $2.8 million of California research and development tax credits available to offset future taxes, which do not expire.

We evaluate tax positions for recognition using a more-likely than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information.

We classify unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as “other non-current liabilities” in the consolidated balance sheets. As of January 31, 2015, the total amount of gross unrecognized tax benefits was $3.2 million, of which $2.0 million, if recognized, would favorably impact our effective tax rate. The aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows for the periods shown (in thousands):

	Fiscal Year Ended January 31,
	2015			2014		2013
Beginning balance	$	2,439		$	1,220	$	644
Increases related to tax positions taken during the prior period		169			28		—
Increases related to tax positions taken during the current period		869			1,191		576
Lapse of statute of limitations		(230	)		—		—
Ending balance	$	3,247		$	2,439	$	1,220

Our policy is to classify interest and penalties associated with unrecognized tax benefits as income tax expense. Interest and penalties were not significant during fiscal 2015.

We file tax returns in the United States for federal, California, and other states. The tax years from 2011 remain open to examination for federal, 2007 for California and 2010 for other states. We file tax returns in multiple foreign jurisdictions. The tax years from 2011 remain open to examination in these foreign jurisdictions.

As of January 31, 2015, we had not made any tax provision for U.S. federal and state income taxes and foreign withholding taxes on the approximately $3.3 million of undistributed cumulative earnings of foreign subsidiaries because those earnings are considered to be indefinitely reinvested in those operations. If we were to repatriate these earnings to the United States, we would be subject to approximately $0.4 million in U.S. income taxes, subject to an adjustment for foreign tax credits and foreign withholding taxes, based on the U.S. statutory rate of 35%.