Income Taxes

The provision for income taxes consisted of the following:



	For the years ended
(dollars in thousands)	December 31, 2016			December 31, 2015			December 31, 2014
Current tax provision:
Federal	$	57,605		$	60,826		$	39,576
State	6,933			7,164			8,947
Foreign	41			11			—
Total current provision	64,579			68,001			48,523

Deferred tax provision:
Federal	9,391			(9,855		)	16,037
State	2,644			(2,216		)	(1,202		)
Foreign	(47		)	—			—
Total deferred (benefit) provision	11,988			(12,071		)	14,835
Total provision	$	76,567		$	55,930		$	63,358

Components of income (loss) before income taxes are as follows:



	For the years ended
	December 31, 2016			December 31, 2015			December 31, 2014

United States	$	211,419		$	147,427		$	165,289
Foreign	(4,611		)	(2,109		)	—
Total income before income taxes	$	206,808		$	145,318		$	165,289

A reconciliation of the federal statutory rate to our effective rate is as follows:



	For the years ended
	December 31, 2016		December 31, 2015		December 31, 2014

Federal statutory income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal income tax benefit	3.3		2.5		2.1
Non-deductible expenses	0.7		2.0		0.3
Domestic manufacturing deduction	(1.4	)	(1.3	)	—
Unrecognized tax benefits	0.5		0.8		1.3
Valuation allowance	0.5		0.5		—
Other	(1.6	)	(1.0	)	(0.4	)
Total	37.0	%	38.5	%	38.3	%

The Company and its subsidiaries file income tax returns in the United States and various state and local, and foreign jurisdictions.

In the normal course of business, the Company is subject to examination by taxing authorities and as of December 31, 2016, the Company's 2011 through 2013 income tax return was being audited by the Internal Revenue Service ("IRS”). There are also various state tax examinations in progress primarily attributable to state nexus matters relating to prior year amended tax returns which have been considered in the Company’s position for uncertain tax benefits. In general, tax years 2011 through 2016 are subject to an examination for U.S. Federal and tax years 2011 through 2016 for some state and local taxing jurisdictions.

As of December 31, 2016, 2015, and 2014 the liability for income taxes associated with uncertain tax positions was $9.7 million, $8.7 million, and $6.9 million, respectively, which if recognized, would affect our effective tax rate. The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits (which excludes federal benefits of state taxes, interest, and penalties):



(dollars in thousands)
Balance at December 31, 2013	4,883
Increases in uncertain tax benefits as a result of tax positions taken in a prior year	206
Increases in uncertain tax benefits as a result of tax positions taken in the current year	2,429
Balance at December 31, 2014	7,518
Increases in uncertain tax benefits as a result of tax positions taken in the current year	1,845
Decreases in uncertain tax benefits from a lapse of applicable statute of limitations	(156		)
Balance at December 31, 2015	$	9,207
Increases in uncertain tax benefits as a result of tax positions taken in a prior year	287
Increases in uncertain tax benefits as a result of tax positions taken in the current year	1,367
Decreases in uncertain tax benefits from a lapse of applicable statute of limitations	(233		)
Decreases in uncertain tax benefits as a result of tax positions taken in a prior year	(2,028		)
Balance at December 31, 2016	$	8,600

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2016 and 2015, the Company recorded approximately $0.8 million and $0.2 million, respectively, of interest and $0.4 million and $0.2 million, respectively, of penalties related to its unrecognized tax benefits.

Based upon the expiration of statutes of limitations and possible settlements in several jurisdictions, we believe it is reasonably possible that the total amount of previously unrecognized tax benefits may decrease by approximately $0.2 million within twelve months after the year ended December 31, 2016.

Components of deferred tax assets and liabilities were as follows:



(dollars in thousands)	December 31, 2016			December 31, 2015
Deferred tax assets:
Inventories	$	1,440		$	1,228
Accrued liabilities	413			12,491
Stock-based compensation	2,544			1,378
Long-term incentive plan	1,600			834
State net operating loss carryforwards	1,509			2,152
Foreign net operating loss carryforwards	1,380			254
State tax credits	1,447			1,826
Federal benefit related to uncertain tax positions	2,724			2,697
Other	1,057			755
Deferred tax assets, gross	14,114			23,615
Valuation allowance	(1,772		)	(782		)
Total deferred tax assets, net	12,342			22,833

Deferred tax liabilities:
Property, plant, and equipment	(22,173		)	(20,441		)
Other	(1,518		)	(1,753		)
Total deferred tax liabilities	(23,691		)	(22,194		)

Net deferred tax (liabilities) assets	$	(11,349	)	$	639

The majority of the NOLs relate to our Heartland operations. As of December 31, 2016, the Company has Missouri state NOLs of $37.1 million and Connecticut NOLs of $4.5 million; these NOLs begin to expire in 2034, 2027, respectively. The Company also has Connecticut research and development tax credit carryforwards of approximately $0.3 million as of December 31, 2016; these credits will begin to expire in 2026. As of December 31, 2016. the Company has Japan NOLs of $3.8 million, Mexico NOLs of $1.5 million and Canada NOLs of $0.2 million; these NOLs will begin to expire in 2024, 2024 and 2034, respectively.

As of December 31, 2016, the Company had a valuation allowance of $1.8 million to reduce our deferred tax assets to an amount more likely than not to be realized. This valuation allowance relates to state tax credits and foreign net operating losses. In evaluating the Company’s ability to realize its deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. Management also considers the projected reversal of deferred tax liabilities and projected future taxable income in making this assessment. Based upon this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of valuation allowance. There was a $0.8 million valuation allowance recorded as of December 31, 2015.

The Company has not provided deferred taxes on undistributed earnings from its foreign subsidiaries, as the Company anticipates that these earnings will be reinvested indefinitely. The Company does not currently plan to initiate any action that would result in these earnings being repatriated to fund its U.S. operations.