Following is a summary of the income before provision for income taxes (in thousands):

Years Ended December 31,	2018			2017			2016
Federal:
Current	$	(11,140	)	$	27,889		$	15,632
Deferred		18,673			(4,383	)		9,898
Total federal		7,533			23,506			25,530
State:
Current		1,147			5,520			4,567
Deferred		1,888			(338	)		19
Total state		3,035			5,182			4,586
Foreign:
Current		381			(12	)		25
Deferred		(535	)		(14	)		21
Total foreign		(154	)		(26	)		46
Total provision for income taxes	$	10,414		$	28,662		$	30,162

Following is a reconciliation of our provision for income taxes based on the Federal statutory tax rate to our effective tax rate (dollars in thousands):

Years Ended December 31,	2018					2017					2016
Federal statutory tax	$	13,472		21.0	%	$	36,562		35.0	%	$	33,728		35.0	%
State taxes, net of federal tax benefit		3,305		5.2			3,814		3.7			2,990		3.1
Foreign taxes		(190	)	(0.3	)		—		—			—		—
Percentage depletion deduction		(951	)	(1.5	)		(1,368	)	(1.3	)		(1,352	)	(1.4	)
Domestic production activities deduction		—		—			(2,765	)	(2.7	)		(1,624	)	(1.7	)
Non-controlling interests		(2,368	)	(3.7	)		(2,346	)	(2.3	)		(3,177	)	(3.3	)
Nondeductible expenses		4,842		7.5			1,128		1.1			1,094		1.1
Changes in uncertain tax positions		(772	)	(1.2	)		—		—			—		—
Capital loss expiration		8,480		13.2			—		—			—		—
Valuation allowance		(6,852	)	(10.7	)		—		—			—		—
Tax Cuts and Jobs Act of 2017		(7,980	)	(12.4	)		(3,664	)	(3.5	)		—		—
Other		(572	)	(0.9	)		(2,699	)	(2.6	)		(1,497	)	(1.5	)
Total	$	10,414		16.2	%	$	28,662		27.4	%	$	30,162		31.3	%

The tax effect of nondeductible expenses for the year ended December 31, 2018 increased to 7.5% from 1.1% when compared to the same period in 2017. This change was primarily due to one-time nondeductible acquisition and integration expenses incurred in 2018.

On December 22, 2017 the U.S. Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was signed into law. As a result of Tax Reform, the U.S. statutory tax rate was lowered from 35% to 21% effective January 1, 2018, a territorial tax system was implemented, and a one-time repatriation tax on deemed repatriated earnings of foreign subsidiaries was imposed, among other changes. ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment. ASU 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain tax effects of Tax Reform. The Company recognized the provisional tax impacts of Tax Reform in its consolidated financial statements for the year ended December 31, 2017. The majority of the impacts were related to the revaluation of deferred tax assets and liabilities at December 31, 2017 and the one-time repatriation tax. During the year ended December 31, 2018, within the one-year measurement period ending December 22, 2018, an $8.0 million benefit to the provisional amount was recorded primarily related to the revaluation of deferred tax assets and liabilities including adjustments to two unconsolidated joint ventures based on changes to the tax positions taken by the related consolidating joint venture partners during 2018. The accounting for the income tax effects of Tax Reform is now complete.

Following is a summary of the deferred tax assets and liabilities (in thousands):

December 31,	2018			2017
Long-term deferred tax assets:
Receivables	$	2,723		$	526
Inventory		90			1,513
Insurance		11,084			7,401
Deferred compensation		10,441			8,985
Other accrued liabilities		1,906			1,525
Accrued compensation		3,803			1,738
Other		3,520			1,379
Net operating loss carryforwards		67,944			2,614
Valuation allowance		(31,823	)		(2,471	)
Total long-term deferred tax assets		69,688			23,210
Long-term deferred tax liabilities:
Property and equipment		49,728			16,832
Contract income recognition		21,359			7,739
Total long-term deferred tax liabilities		71,087			24,571
Net long-term deferred tax liabilities	$	(1,399	)	$	(1,361	)

The deferred income taxes asset, net of $2.9 million at December 31, 2018 is included in other noncurrent assets in our consolidated balance sheets.

The following is a summary of the net operating loss carryforwards at December 31, 2018 (in thousands):

The federal, state and foreign net operating loss carryforwards above included unrecognized tax benefits taken in prior years and the net operating loss carryforward deferred tax asset is presented net of these unrecognized tax benefits in accordance with ASC 740. The federal and state net operating loss and capital loss carryforwards acquired during the Layne acquisition are subject to Internal Revenue Code Section 382 limitations and may be limited in future periods and a portion may expire unused. As we expect to use the federal net operating loss carryforwards prior to expiration we believe that it is more likely than not that these deferred tax assets will be realized and no valuation allowance was deemed necessary. We have provided a valuation allowance on the net operating loss deferred tax asset or the net deferred tax assets for certain state and local jurisdictions because we do not believe it is more likely than not that they will be realized. The federal and state capital loss carryforwards and foreign tax loss carryforwards acquired during the Layne acquisition are expected to expire unused and as we do not believe it is more likely than not that they will be realized we have provided a valuation allowance on the related deferred tax assets. The federal and state capital loss carryforwards acquired during the Layne acquisition expired on December 31, 2018; therefore, the deferred tax assets and related valuation allowance was written off.

The deduction to the valuation allowance is mainly due to the expiration of the federal and state capital loss carryforwards discussed above. Additions to the valuation allowance are insignificant for the year ended December 31, 2018.

We intend to indefinitely reinvest certain earnings of our foreign subsidiaries and affiliates. Tax Reform generally eliminates federal income taxes on dividends from foreign subsidiaries therefore we would only be subject to other taxes, such as withholding and local taxes, upon distribution of these earnings. Of the $42.0 million of accumulated undistributed earnings that we consider indefinitely reinvested as of December 31, 2018, it is not practicable to determine the amount of taxes that would be payable upon remittance of these earnings. Deferred foreign withholding taxes have been provided on undistributed earnings of certain foreign subsidiaries and foreign affiliates where the earnings are not considered to be invested indefinitely.

Uncertain tax positions: We file income tax returns in the U.S. and various state and local jurisdictions. We are currently under examination by various state taxing authorities for various tax years. We do not anticipate that any of these audits will result in a material change in our financial position. We are no longer subject to U.S. federal examinations by tax authorities for years before 2011. With few exceptions, as of December 31, 2018, we are no longer subject to state examinations by taxing authorities for years before 2011.

We file income tax returns in foreign jurisdictions where we operate. The returns are subject to examination which may be ongoing at any point in time and tax liabilities are recorded based on estimates of additional taxes which will be due upon settlement of those examinations. The tax years subject to examination by foreign tax authorities vary by jurisdiction, but generally we are no longer subject to examinations by taxing authorities for years before 2015.

We had approximately $22.4 million and $3.2 million of total gross unrecognized tax benefits as of December 31, 2018 and 2017, respectively. There were approximately $11.0 million and $3.1 million of unrecognized tax benefits that would affect the effective tax rate in any future period at December 31, 2018 and 2017, respectively. It is reasonably possible that our unrecognized tax benefit could decrease by approximately $6.4 million in 2019, of which $2.3 million will impact our effective tax rate in 2019. The decrease relates to anticipated statute expirations and anticipated resolution of outstanding unrecognized tax benefits.

The following is a tabular reconciliation of unrecognized tax benefits (in thousands) the balance of which is included in other long-term liabilities and other current liabilities in the consolidated balance sheets:

December 31,	2018			2017			2016
Beginning balance	$	3,171		$	3,262		$	1,578
Gross increases - acquisitions		20,153			—			—
Gross increases – current period tax positions		36			—			1,902
Gross decreases – current period tax positions		(3	)		(73	)		(125	)
Gross increases – prior period tax positions		2			1			2
Gross decreases – prior period tax positions		(195	)		(6	)		(5	)
Settlements with taxing authorities/lapse of statute of limitations		(781	)		(13	)		(90	)
Ending balance	$	22,383		$	3,171		$	3,262

We record interest on uncertain tax positions in interest expense and penalties in other income, net in our consolidated statements of operations. During the years ended December 31, 2018, 2017 and 2016, we recognized approximately $1.1 million interest and penalty income, $0.2 million interest expense and $0.1 million interest expense, respectively.

Approximately $8.3 million and $0.4 million of accrued interest and penalties related to our uncertain tax position liability was included in other long-term liabilities and accrued expenses and other current liabilities in our consolidated balance sheets at December 31, 2018 and 2017, respectively. The increase in accrued interest and penalties during 2018 was mainly due to the Layne acquisition in which $9.0 million of accrued interest and penalties was recorded.