Income Tax

The provision for income taxes consists of the following components:



	Fiscal Year Ended March 31,
	2016			2015			2014
Current:
Federal taxes	$	(9,338	)	$	18,055		$	8,673
State taxes	(403		)	1,887			2,380
Foreign taxes	374			262			252
Total current taxes	(9,367		)	20,204			11,305
Deferred:
Federal taxes	$	10,474		$	(9,804	)	$	(2,894	)
State taxes	(100		)	(1,771		)	(897		)
Foreign taxes	(344		)	(297		)	(193		)
Total deferred taxes	10,030			(11,872		)	(3,984		)
Provision for income taxes	$	663		$	8,332		$	7,321

The provision for income taxes differs from the amount computed at the federal statutory rate as follows:



	Fiscal Year Ended March 31,
	2016		2015		2014
Current:
Federal income tax statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
State income taxes, net of Federal benefit	(5.2	)	2.0		4.2
Research and development tax credits	(23.4	)	(4.4	)	(5.3	)
Qualified production activities income deduction	—		(5.4	)	(4.9	)
Impairment of goodwill	—		—		5.7
Stock option deduction	3.7		0.6		0.7
Other non-recurring adjustments for State taxes	—		(1.8	)	—
Meals and entertainment	3.7		0.8		1.2
Acquisition expenses	(3.6	)	—		(0.3	)
Foreign rate differential	(10.2	)	(1.6	)	(1.5	)
Net operating loss carryback	9.1		—		—
Other	1.4		(1.8	)	(3.0	)
Effective income tax rate	10.5	%	23.4	%	31.8	%

The net deferred tax assets and liabilities in the accompanying consolidated balance sheets consist of the following:



	March 31, 2016			March 31, 2015
Deferred tax assets:
Net operating losses	$	17,920		$	512
Deferred revenue	10,682			11,970
Accrued compensation and benefits	5,868			7,744
Allowance for doubtful accounts	4,176			4,944
Research and development credit	3,611			1,988
Compensatory stock option expense	2,664			2,852
Deferred compensation	2,586			2,342
State income taxes	445			(730		)
Inventory valuation	68			56
Other	—			3,561
Total deferred tax assets	48,020			35,239
Deferred tax liabilities:
Accelerated depreciation	$	(2,434	)	$	(756	)
Capitalized software	(9,644		)	(8,728		)
Intangible assets	(22,972		)	7,603
Prepaid expense	(1,249		)	(1,321		)
Other	(972		)	—
Total deferred tax liabilities	(37,271		)	(3,202		)
Valuation allowance	(2,551		)	(1,840		)
Deferred tax assets, net	$	8,198		$	30,197

The deferred tax assets and liabilities have been shown net in the accompanying consolidated balance sheets as noncurrent.

As of March 31, 2016 and March 31, 2015, we had federal net operating loss (“NOL”) carryforwards of $45,202 and $1,464, respectively. The federal NOL carryforwards were inherited in connection with our acquisition of HealthFusion in January 2016 and Gennius in March 2015. The NOL related to the HealthFusion acquisition was estimated based on available information as of March 31, 2016 and may change based upon the filing of the final tax returns for HealthFusion. The NOL carryforwards expire in various amounts starting in 2029 for both federal and state tax purposes. As of March 31, 2016, we had state NOL carryforwards of approximately $30,430, of which $18,695 was related to our expected current year taxable NOL and the remainder was related to the HealthFusion acquisition state NOL tax attribute. We had no state NOL carryfowards as of March 31, 2015. The utilization of the federal NOL carryforwards is subject to limitations under the rules regarding changes in stock ownership as determined by the Internal Revenue Code.

As of March 31, 2016 and March 31, 2015, the research and development tax credit carryforward available to offset future federal and state taxes was $3,611 and $1,988 respectively. The credits expire in various amounts starting in 2019.

We expect to receive the full benefit of the deferred tax assets recorded with the exception of certain state credits and state NOL carryforwards for which we have recorded a valuation allowance.

Uncertain tax positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits, which is recorded within other noncurrent liabilities in our consolidated balance sheet, is as follows:



Balance at March 31, 2014	$	875
Additions for current/prior year tax positions	3,106
Reductions for prior year tax positions	(218		)
Balance at March 31, 2015	$	3,763
Additions for prior year tax positions	235
Reductions for prior year tax positions	(43		)
Balance at March 31, 2016	$	3,955

During the year ended March 31, 2016, we recorded additional liabilities of $235 mostly related to various state tax planning benefits recorded in the current year for prior year tax positions. The total amount of unrecognized tax benefit that, if recognized, would decrease the income tax provision is $3,955.

Our practice is to recognize interest related to income tax matters as interest expense in the consolidated statements of comprehensive income. We had approximately $129 and $332 of accrued interest related to income tax matters as of March 31, 2016 and 2015, respectively. We recognized $57 and $309 of interest related to income tax matters in the consolidated statements of comprehensive income in the years ended March 31, 2016 and 2015, respectively, and an insignificant amount in the year ended March 31, 2014. No penalties related to income tax matters were accrued or recognized in our consolidated financial statements for all periods presented.

We are no longer subject to U.S. federal income tax examinations for tax years before 2012. With a few exceptions, we are no longer subject to state or local income tax examinations for tax years before 2011. We do not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.