12. Income Taxes

The effective tax rate from continuing operations was 80.9% in 2016, 35.7% in 2015 and 36.4% in 2014. A reconciliation of the Federal statutory income tax rate to the Company’s effective tax rate is as follows:

	Percent of Income before Income Taxes
	2016			2015			2014
Statutory Federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes - net of Federal tax benefit		7.0			0.2			(4.5	)
Foreign tax rate differential		(0.7	)		(2.4	)		1.8
Domestic production deduction		(7.6	)		(4.0	)		(6.6	)
Non-deductible expenses		6.5			4.9			7.0
Asset impairment		26.0			—			—
Changes in unrecognized tax benefits		(1.9	)		(1.8	)		(2.5	)
Foreign tax incentives		(5.0	)		(2.3	)		(3.0	)
Valuation allowances		23.0			4.8			9.0
Other		(1.4	)		1.3			0.2
Effective tax rate for the year		80.9	%		35.7	%		36.4	%

Income from continuing operations before income taxes was attributable to the following sources:

	2016			2015		2014
United States	$	17,010		$	19,546	$	21,074
Foreign		(9,015	)		2,316		(6,991	)
Totals	$	7,995		$	21,862	$	14,083

Income tax expense (benefit) from continuing operations consisted of the following:

	2016					2015					2014
	Current		Deferred			Current		Deferred			Current			Deferred
Federal	$	5,684	$	(413	)	$	6,677	$	(368	)	$	8,298		$	(1,208	)
Foreign		388		(57	)		504		783			(277	)		(710	)
State and local		641		227			943		(730	)		(234	)		(747	)
	$	6,713	$	(243	)	$	8,124	$	(315	)	$	7,787		$	(2,665	)

Significant components of the Company’s deferred taxes as of December 31, 2016 and 2015 are as follows:

	2016			2015
Deferred income tax liabilities
Property, plant and equipment	$	11,235		$	12,989
Tax-deductible goodwill		9,519			7,871
Non-deductible intangibles		—			282
State deferred taxes		360			212
Other		911			1,010
		22,025			22,364
Deferred income tax assets
Compensation		5,686			7,081
Inventory valuation		861			945
Allowance for uncollectible accounts		510			194
Non-deductible accruals		3,562			3,892
Non-deductible intangibles		1,165			—
Net operating loss carryforwards		5,989			4,715
		17,773			16,827
Valuation Allowance		(6,114	)		(3,664	)
		11,659			13,163
Net deferred income tax liability	$	10,366		$	9,201

ASC 740, Income Taxes, requires that deferred tax assets be reduced by a valuation allowance, if based on all available evidence, it is more likely than not that the deferred tax asset will not be realized. Available evidence includes the reversal of existing taxable temporary differences, future taxable income exclusive of temporary differences, taxable income in carryback years and tax planning strategies. At December 31, 2016, the Company has a deferred tax asset of $6.0 million resulting from $17.6 million of foreign net operating tax loss carryforwards, and a $6.1 million valuation allowance related to Brazil. The full valuation allowance as of December 31, 2016 is due to the cumulative loss position of the Brazilian businesses. Brazilian net operating tax loss carryforwards have no expiration and are carried forward indefinitely.

The following table summarizes the activity related to the Company’s valuation allowance:

	2016			2015			2014
Balance at January 1	$	(3,664	)	$	(4,326	)	$	(4,264	)
(Charged) Credited to Expense		(1,655	)		(763	)		414
Net write-offs		—			—			—
Foreign currency translation adjustment		(795	)		1,425			(476	)
Balance at December 31	$	(6,114	)	$	(3,664	)	$	(4,326	)

No provision has been recorded for unremitted earnings of foreign subsidiaries as it is the Company’s intention to indefinitely reinvest the earnings of those subsidiaries. Accordingly, at December 31, 2016, the Company had not recorded a deferred tax liability related to investments in its foreign subsidiaries that are essentially permanent in duration. The amount of such temporary differences was estimated to be approximately $18.6 million and may become taxable in the U.S. upon a repatriation of assets or a sale or liquidation of the subsidiaries. It is not practical to estimate the related amount of unrecognized tax liability.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

	2016			2015			2014
Balance at January 1	$	151		$	483		$	840
Increases related to previous year tax positions		478			151			5
Reductions due to lapse of applicable statute of limitations		(151	)		(483	)		(362	)
Reduction due to settlements		—			—			—
Balance at December 31	$	478		$	151		$	483

The total amount of gross unrecognized tax benefits that would reduce the Company’s effective tax rate was $0.5 million, $0.2 million and $0.5 million at December 31, 2016, 2015 and 2014, respectively. The amount of accrued interest expense included as a liability within the Company’s Consolidated Statements of Financial Position was less than $0.1 million for December 31, 2016 and 2015. The Company expects the amount of unrecognized tax benefits will change within the next twelve months. It is reasonably possible the company will recognize unrecognized tax benefits within the next twelve months in the range of zero to $0.5 million resulting from the possible expiration of certain statutes of limitation.

The Company and its subsidiaries file U.S. Federal, state and local, and non-U.S. income tax returns. As of December 31, 2016, the Company is no longer subject to U.S. Federal examinations by tax authorities for tax years before 2012. The Company is subject to state and local examinations for tax years of 2012 through 2016. In addition, the Company is subject to non-U.S. income tax examinations for tax years of 2011 through 2016.