Income Taxes

The Company's income (loss) before income taxes and income tax expense (benefit) from continuing operations, each by tax jurisdiction, consisted of the following (dollars in thousands):



	Year ended December 31,
	2016			2015			2014
Income (loss) before income taxes:
Domestic	$	(69,850	)	$	(3,150	)	$	67,300
Foreign	11,620			(18,970		)	2,300
Total income (loss) before income taxes	$	(58,230	)	$	(22,120	)	$	69,600
Current income tax expense:
Federal	$	7,560		$	12,150		$	24,630
State and local	1,920			1,080			3,440
Foreign	4,250			2,060			1,170
Total current income tax expense	13,730			15,290			29,240
Deferred income tax expense (benefit):
Federal	(28,180		)	(1,980		)	(9,370		)
State and local	(2,550		)	(1,530		)	(40		)
Foreign	(1,430		)	(5,240		)	2,880
Total deferred income tax expense	(32,160		)	(8,750		)	(6,530		)
Income tax expense (benefit)	$	(18,430	)	$	6,540		$	22,710

The components of deferred taxes are as follows (dollars in thousands):



	December 31, 2016			December 31, 2015
Deferred tax assets:
Accounts receivable	$	780		$	550
Inventories	6,410			5,680
Goodwill and other intangible assets	3,120			—
Accrued liabilities and other long-term liabilities	26,110			27,550
Tax loss and credit carryforwards	6,680			4,660
Gross deferred tax asset	43,100			38,440
Valuation allowances	(5,670		)	(3,060		)
Net deferred tax asset	37,430			35,380
Deferred tax liabilities:
Property and equipment	(14,580		)	(16,340		)
Goodwill and other intangible assets	—			(26,600		)
Investment in foreign affiliates, including withholding tax	(1,140		)	(870		)
Other, principally deferred income	(1,330		)	(2,580		)
Gross deferred tax liability	(17,050		)	(46,390		)
Net deferred tax asset (liability)	$	20,380		$	(11,010	)

The following is a reconciliation of income tax expense (benefit) computed at the U.S. federal statutory rate to income tax expense (benefit) allocated to income (loss) from continuing operations before income taxes (dollars in thousands):



	Year ended December 31,
	2016			2015			2014
U.S. federal statutory rate	35		%	35		%	35		%
Tax at U.S. federal statutory rate	$	(20,380	)	$	(7,740	)	$	24,360
State and local taxes, net of federal tax benefit	(550		)	(520		)	2,520
Differences in statutory foreign tax rates	(1,930		)	110			(200		)
Change in recognized tax benefits	(1,410		)	(460		)	(2,490		)
Goodwill and other intangible assets impairment	5,050			11,430			—
Nontaxable gains	(310		)	(980		)	—
Research and manufacturing incentives	(830		)	(1,680		)	(1,920		)
Tax on undistributed foreign earnings	340			610			50
Net change in valuation allowance	2,140			3,770			3,270
Other, net	(550		)	2,000			(2,880		)
Income tax expense (benefit)	$	(18,430	)	$	6,540		$	22,710

The Company has recorded deferred tax assets on $43.3 million of various state operating loss carryforwards and $15.9 million of various foreign operating loss carryforwards. The majority of the state tax loss carryforwards expire between 2024 and 2027 and the majority of the foreign losses have indefinite carryforward periods.

The Company has not made a provision for U.S. or additional foreign withholding taxes related to investments in foreign subsidiaries that are indefinitely reinvested since any excess of the amount for financial reporting over the tax basis in these investments is not significant as of December 31, 2016.

Unrecognized tax benefits

The Company has approximately $3.6 million and $4.6 million of unrecognized tax benefits ("UTBs") as of December 31, 2016 and 2015, respectively. If the unrecognized tax benefits were recognized, the impact to the Company's effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2016 and 2015 approximately $3.0 million and $4.1 million, respectively.

A reconciliation of the change in the UTBs and related accrued interest and penalties for the years ended December 31, 2016 and 2015 is as follows (dollars in thousands):



	Unrecognized Tax Benefits
Balance at December 31, 2014	$	5,270
Tax positions related to current year:
Additions	240
Tax positions related to prior years:
Additions	1,570
Reductions	(360		)
Settlements	(390		)
Lapses in the statutes of limitations	(1,720		)
Balance at December 31, 2015	$	4,610
Tax positions related to current year:
Additions	120
Tax positions related to prior years:
Additions	80
Reductions	(10		)
Settlements	—
Lapses in the statutes of limitations	(1,230		)
Balance at December 31, 2016	$	3,570

In addition to the UTBs summarized above, the Company has recorded approximately $2.0 million and $2.2 million in potential interest and penalties associated with uncertain tax positions as of December 31, 2016 and 2015, respectively.

The Company is subject to U.S. federal, state and local, and certain non-U.S. income tax examinations for tax years 2011 through 2015. In addition, there are currently several state examinations and one foreign income tax examination in process. The Company does not believe that the results of these examinations will have a significant impact on the Company's tax position or its effective tax rate. During 2016, the Company concluded the 2013 U.S. examination of one of its recently acquired businesses. This examination resulted in no impact to the Company's tax position or its effective tax rate.

Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to UTBs and is not aware of, nor does it anticipate, any material subsequent events that could have a significant impact on the Company's financial position during the next twelve months.