(7) Income Taxes

The components of income (loss) from continuing operations before income taxes are as follows (in thousands):



	Years ended December 31,
	2016		2015		2014
Domestic	$	(1,097,109)	$	(2,069,019)	$	372,672
Foreign		(3,232)		9,236		69,517
	$	(1,100,341)	$	(2,059,783)	$	442,189

The components of income tax expense (benefit) are as follows (in thousands):



	Years ended December 31,
	2016		2015		2014
Current:
Federal	$	(101,578)	$	(952)	$	150,997
State		(159)		2,818		11,339
Foreign		19,156		19,227		36,287
		(82,581)		21,093		198,623
Deferred:
Federal		(179,721)		(249,193)		(33,172)
State		(9,348)		(10,034)		648
Foreign		4,649		(13,886)		(4,700)
		(184,420)		(273,113)		(37,224)
	$	(267,001)	$	(252,020)	$	161,399

Income tax expense (benefit) differs from the amounts computed by applying the U.S. Federal income tax rate of 35% to income (loss) before income taxes as follows (in thousands):



	Years ended December 31,
	2016		2015		2014
Computed expected tax expense (benefit)	$	(385,119)	$	(720,923)	$	154,766
Increase (decrease) resulting from
State and foreign income taxes		(8,038)		(6,353)		8,467
Reduction in value of assets		115,725		464,395		-
Other		10,431		10,861		(1,834)
Income tax expense (benefit)	$	(267,001)	$	(252,020)	$	161,399

The tax effects of temporary differences that give rise to significant components of deferred income tax assets and liabilities are as follows (in thousands):



	December 31,
	2016		2015
Deferred tax assets:
Allowance for doubtful accounts	$	9,172	$	8,275
Operating loss and tax credit carryforwards		85,383		92,798
Compensation and employee benefits		59,351		59,310
Decommissioning liabilities		40,994		30,400
Other		51,069		57,768
		245,969		248,551
Valuation allowance		(6,722)		(5,395)
Net deferred tax assets		239,247		243,156

Deferred tax liabilities:
Property, plant and equipment		352,683		469,728
Notes receivable		14,796		14,796
Goodwill and other intangible assets		98,868		119,661
Other		16,511		22,040
Deferred tax liabilities		482,858		626,225
Net deferred tax liability	$	243,611	$	383,069

The net deferred tax assets reflect management’s estimate of the amount that will be realized from future profitability and the reversal of taxable temporary differences that can be predicted with reasonable certainty. A valuation allowance has been recognized on a portion of the state net operating loss carryforward deferred tax asset. After considering all available evidence at December 31, 2016, the Company determined that it was more likely than not that a portion of the carryforward would not be realized. Accordingly, the Company increased deferred income tax expense by an additional $1.3 million of the valuation allowance.

At December 31, 2016, the Company had $320.8 million in U.S. net operating loss carryforwards, which are available to reduce future or prior taxable income. The expiration dates for utilization of the loss carryforwards are 2021 through 2036. At December 31, 2016, the Company also had various state net operating loss carryforwards with expiration dates from 2017 to 2031. A net deferred tax asset of $26.5 million reflects the expected future tax benefit for the state loss carryforwards. At December 31, 2016, the Company also had a U.S. foreign tax credit carryforward of $49.1 million with expiration dates from 2021 to 2026.

The Company has not provided U.S. income tax expense on earnings of its foreign subsidiaries, since the Company has reinvested or expects to reinvest outside the U.S. the undistributed earnings indefinitely. At December 31, 2016, the Company’s foreign subsidiaries had an accumulated deficit in earnings. The Company does not intend to repatriate the earnings of its foreign subsidiaries. The Company has not provided U.S. income taxes for such earnings, except to the extent that such earnings were previously subject to U.S. income taxes. These earnings could become subject to U.S. income tax if remitted, or if deemed remitted as a dividend. It is not practicable to estimate the amount of taxes that might be payable on such undistributed earnings.

The Company files income tax returns in the U.S., including federal and various state filings, and certain foreign jurisdictions. The number of years that are open under the statute of limitations and subject to audit varies depending on the tax jurisdiction. The Company remains subject to U.S. federal tax examinations for years after 2012.

The Company had unrecognized tax benefits of $29.9 million, $29.7 million and $30.3 million as of December 31, 2016, 2015 and 2014, respectively, all of which would impact the Company’s effective tax rate if recognized.

The activity in unrecognized tax benefits is as follows (in thousands):



	Years ended December 31,
	2016		2015		2014
Unrecognized tax benefits,
December 31, 2015, 2014 and 2013, respectively	$	29,715	$	30,344	$	29,899
Additions based on tax positions related to prior years		6,874		6,752		7,860
Reductions based on tax positions related to prior years		(3,582)		-		(5,438)
Reductions as a result of a lapse of the applicable statute of limitations		(3,051)		-		(1,977)
Reductions relating to settlements with taxing authorities		-		(7,381)		-
Unrecognized tax benefits,
December 31, 2016, 2015 and 2014, respectively	$	29,956	$	29,715	$	30,344

The Company recorded $2.5 million, $1.0 million and $0.6 million of interest and penalty for 2016, 2015 and 2014, respectively, classified as a component of income tax expense in the consolidated statements of operations. The amounts in the table above include cumulative accrued interest and penalties of $7.4 million, $4.6 million and $5.0 million at December 31, 2016, 2015 and 2014, respectively, which are included in other non-current liabilities on the consolidated balance sheets.