NOTE 4. INCOME TAXES

On a quarterly basis, we estimate what our effective tax rate will be for the full fiscal year and record a quarterly income tax provision based on the anticipated rate. As the year progresses, we refine our estimate based on the facts and circumstances, including discrete events, by each tax jurisdiction. Our effective tax rate for the three months ended March 31, 2017 and 2016 was 23.3% and 29.2%, respectively. Our effective tax rate for the year ended December 31, 2017 is expected to be 23.3% compared to 44.4% for the year ended December 31, 2016. The decrease is due mainly to the higher level of income expected in China and related foreign tax rate differential benefit.

The differences between federal income taxes computed at the federal statutory rate and reported income taxes for the three months ended March 31, 2017 and 2016 are as follows:

	Three Months Ended
	March 31
	2017			2016
Statutory federal tax provision (benefit)	$	(6,500	)	$	30,800
State income taxes	6,400			5,600
Income tax credits	(25,000		)	(20,300		)
Change in uncertain tax positions	2,500			1,000
Foreign tax benefit	14,300			(5,600		)
Other	3,852			14,500

Income tax expense (benefit)	$	(4,448	)	$	26,000

At March 31, 2017, we had $49,500 of net uncertain tax benefit positions remaining in other long-term liabilities related to research and development credits that would increase our effective income tax rate if recognized. At December 31, 2016, we had $52,000 of net uncertain tax benefit postions recorded in other long-term liabilities that would reduce our effective income tax rate if recognized.