Income Taxes

Income before income taxes was attributable to the following sources:



	Year Ended December 31,
	2016		2015		2014
United States	$	35,867	$	32,807	$	30,380
Canada	1,377		2,451		7,920
Total	$	37,244	$	35,258	$	38,300

The provision for income taxes follows:



	Year Ended December 31,
	2016		2015			2014
Currently payable:
Federal	$	12,216	$	13,337		$	13,159
State	2,286		2,487			2,524
Canadian	398		611			2,127
Total current	14,900		16,435			17,810
Deferred taxes	60		(2,975		)	(2,679		)
Total taxes on income	$	14,960	$	13,460		$	15,131


Q.	Income Taxes (continued)

A reconciliation of the expected statutory U.S. federal rate to our actual effective income tax rate follows:



	Year Ended December 31,
	2016		2015		2014
Statutory U.S. federal tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	4.0		3.7		3.9
Effect of Canadian income taxes	(.2	)	(.5	)	(1.7	)
Nondeductible expenses	2.2		2.3		1.9
ESOP dividend deduction	(.7	)	(.8	)	(.7	)
Uncertain tax adjustments and audit settlement	.2		1.5		1.6
Valuation allowance	—		(2.2	)	—
All other, net	(.3	)	(.8	)	(.5	)
Effective income tax rate	40.2	%	38.2	%	39.5	%

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is recorded when it is more-likely-than-not that an income tax benefit will not be realized.

Significant components of our noncurrent net deferred tax assets and liabilities at December 31, were as follows:



	December 31,
	2016		2015
Deferred tax assets:
Self-insurance accruals	$	21,967	$	21,136
Accrued compensated absences	3,540		3,189
Accrued expenses and other liabilities	1,394		1,255
Accrued stock compensation	2,502		2,144
Defined benefit pension plans	4,019		3,721
Foreign tax credit carryforward	575		680
Other future deductible amounts, net	4,213		4,354
	38,210		36,479
Deferred tax liabilities:
Intangibles	297		150
Prepaid expenses	3,510		3,138
Property and equipment	23,274		21,670
	27,081		24,958
Net deferred tax assets--noncurrent	$	11,129	$	11,521

We treat all of our Canadian subsidiary earnings through December 31, 2016 as permanently reinvested and have not provided any U.S. federal or state tax thereon. As of December 31, 2016, approximately $28,983 of undistributed earnings attributable to our Canadian operations was considered to be indefinitely invested. Presently, our intention is to reinvest the earnings permanently.


Q.	Income Taxes (continued)

If, in the future, these earnings are distributed to the U.S. in the form of dividends or otherwise, or if the Company determines such earnings will be remitted in the foreseeable future, the Company would be subject to U.S. income taxes and Canadian withholding taxes. It is not practicable to estimate the amount of taxes that would be payable upon remittance of these earnings given the various tax planning alternatives that we could employ should we decide to repatriate those earnings.

As at December 31, 2015, we released a valuation allowance that had been recorded in prior years related to the foreign tax credit carryforward that arose in 2010--wherein we repatriated earnings in 2010 of our Canadian operations due to capital in Canada in excess of current and future projected needs. Management presently believes that it is more-likely-than-not that the deferred tax asset, related to the foreign tax credit that expires in 2020, will be realized. The criteria considered in making the determination included the ability to utilize tax-planning strategies, historical and projected operating results, and the period of time over which the foreign tax credit can be utilized.

The amount of income taxes we pay is subject to audit by U.S. federal, state, local and Canadian tax authorities, which may result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. Uncertain tax positions are recognized only if they are more-likely-than-not to be upheld during examination based on their technical merits. The measurement of the uncertain tax position is based on the largest benefit amount that is more-likely-than-not (determined on a cumulative probability basis) to be realized upon settlement of the matter. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate settlement, a further charge to expense may result.

The balance of unrecognized benefits and the amount of related interest and penalties at December 31, were as follows:



	December 31,
	2016		2015
Unrecognized tax benefits	$	2,532	$	2,557
Portion, if recognized, would reduce tax expense and effective tax rate	2,053		1,981
Accrued interest on unrecognized tax benefits	107		115

We recognize interest accrued related to unrecognized tax benefits in income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense.

The Company is routinely under audit by U.S. federal, state, local and Canadian authorities in the area of income tax. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. During the fourth quarter 2013, the U.S. Internal Revenue Service completed its audit of the Company's U.S. income tax returns for 2010 and 2011 and, during 2010, Canada Revenue Agency completed its audit of the Company's Canadian operations for 2006, 2007 and 2008. With the exception of U.S. state jurisdictions, the Company is no longer subject to examination by tax authorities for the years through 2012. As of December 31, 2016, we believe it is reasonably possible that the total amount of unrecognized tax benefits will not significantly increase or decrease.


Q.	Income Taxes (continued)

The changes in our unrecognized tax benefits are summarized in the table below:



	Year Ended December 31,
	2016			2015			2014
Balance, beginning of year	$	2,557		$	1,949		$	1,221
Additions based on tax positions related to the current year	402			642			587
Additions for tax positions of prior years	51			52			234
Reductions for tax positions of prior years	(39		)	(63		)	(79		)
Lapses in statutes of limitations	(439		)	(23		)	(14		)
Balance, end of year	$	2,532		$	2,557		$	1,949