INCOME TAX

Pre-tax income for the years ended December 31, 2016, 2015 and 2014 consists of the following (dollars in thousands):



	2016		2015		2014
Pre-tax income - U.S.	$	758,496	$	493,328	$	768,857
Pre-tax income - foreign	285,450		251,467		239,676
Total pre-tax income	$	1,043,946	$	744,795	$	1,008,533

The provision for income tax expense for the years ended December 31, 2016, 2015 and 2014 consists of the following (dollars in thousands):



	2016		2015			2014
Current income tax expense (benefit):
U.S.	$	1,020	$	1,588		$	18,495
Foreign	47,706		92,045			135,260
Total current	48,726		93,633			153,755
Deferred income tax expense (benefit):
U.S.	273,928		193,204			242,694
Foreign	19,849		(44,208		)	(71,963		)
Total deferred	293,777		148,996			170,731
Total provision for income taxes	$	342,503	$	242,629		$	324,486

Provision for income tax expense differed from the amounts computed by applying the U.S. federal income tax statutory rate of 35% to pre-tax income as a result of the following for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands):



	2016			2015			2014
Tax provision at U.S. statutory rate	$	365,381		$	260,678		$	352,987
Increase (decrease) in income taxes resulting from:
Foreign tax rate differing from U.S. tax rate	(13,974		)	(9,950		)	(12,483		)
Differences in tax basis in foreign jurisdictions	(17,770		)	(32,472		)	(8,256		)
Deferred tax valuation allowance	10,963			19,157			2,076
Amounts related to tax audit contingencies	111			88			(9,083		)
Corporate rate changes - other	—			—			280
Subpart F	1,783			3,473			6,132
Foreign tax credits	(1,683		)	(1,936		)	(1,045		)
Return to provision adjustments	(1,473		)	1,482			(8,123		)
Other, net	(835		)	2,109			2,001
Total provision for income taxes	$	342,503		$	242,629		$	324,486
Effective tax rate	32.8		%	32.6		%	32.2		%

Total income taxes for the years ended December 31, 2016, 2015 and 2014 were as follows (dollars in thousands):



	2016			2015			2014
Provision for income taxes	$	342,503		$	242,629		$	324,486
Income tax from OCI and additional paid-in-capital:
Net unrealized holding gain (loss) on debt and equity securities recognized for financial reporting purposes	157,929			(339,889		)	348,697
Exercise of stock options	(162		)	(2,963		)	3,011
Foreign currency translation	21,081			16,478			22,998
Unrealized pension and post retirement	1,772			1,726			(14,770		)
Total income taxes provided	$	523,123		$	(82,019	)	$	684,422

The tax effects of temporary differences that give rise to significant portions of the deferred income tax asset and liabilities at December 31, 2016 and 2015, are presented in the following tables (dollars in thousands):



	2016			2015
Deferred income tax assets:
Nondeductible accruals	$	125,879		$	116,106
Differences between tax and financial reporting amounts concerning certain reinsurance transactions	87,688			63,543
Differences in the tax basis of cash and invested assets	775			5,931
Investment income differences	35,192			—
Deferred acquisition costs capitalized for tax	143,003			131,714
Net operating loss carryforward	325,806			524,501
Capital loss and tax credit carryforwards	101,223			77,888
Subtotal	819,566			919,683
Valuation allowance	(133,354		)	(127,132		)
Total deferred income tax assets	686,212			792,551
Deferred income tax liabilities:
Deferred acquisition costs capitalized for financial reporting	1,013,642			1,011,753
Differences between tax and financial reporting amounts concerning certain reinsurance transactions	1,773,929			1,509,211
Differences in the tax basis of cash and invested assets	505,841			336,870
Investment income differences	5,635			14,654
Differences in foreign currency translation	91,067			81,492
Prepaid expenses	—			1,014
Total deferred income tax liabilities	3,390,114			2,954,994
Net deferred income tax liabilities	$	2,703,902		$	2,162,443
Balance sheet presentation of net deferred income tax liabilities:
Included in other assets	$	66,738		$	55,885
Included in deferred income taxes	2,770,640			2,218,328
Net deferred income tax liabilities	$	2,703,902		$	2,162,443

As of December 31, 2016, a valuation allowance for deferred tax assets of approximately $133.4 million was provided on the total deferred tax assets in certain jurisdictions. The valuation allowance is primarily related to numerous branches and legal entities for which there is no history of earnings in recent years. Further there is a partial valuation allowance on RGA Reinsurance Company of South Africa, Limited (“RGA South Africa”), RGA Reinsurance Company of Australia Limited (“RGA Australia”) and Aurora National net operating losses as well as RGA International Reinsurance Company dac (“RGA International”) foreign tax credit. As of December 31, 2015, a valuation allowance for deferred tax assets of approximately $127.1 million was provided on the total deferred tax assets. The valuation allowance is primarily related to numerous branches and legal entities for which there is no history of earnings in recent years. Further there is a partial valuation allowance on RGA South Africa and RGA Australia’s net operating losses, RGA International’s foreign tax credit and on RGA’s deferred tax asset related to share expense for foreign entities. The Company utilizes valuation allowances when it believes, based on the weight of the available evidence, that it is more likely than not that the deferred income tax asset will not be utilized.

The earnings of substantially all of the Company’s foreign subsidiaries have been permanently reinvested in foreign operations. A provision of $4.2 million has been made for U.S. taxes on repatriation. No other provision has been made for U.S. tax or foreign withholding taxes that may be applicable upon any repatriation or sale. The determination of the unrecognized deferred tax liability for temporary differences related to investments in the Company’s foreign subsidiaries is not practicable. At December 31, 2016 and 2015, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $1,147.2 million and $992.9 million, respectively.

During 2016, 2015 and 2014, the Company received federal and foreign income tax refunds of approximately $6.9 million, $136.8 million and $9.3 million, respectively. The Company made cash income tax payments of approximately $68.0 million, $178.4 million and $79.6 million in 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, the Company recognized gross deferred tax assets associated with net operating losses of approximately $1,353.6 million and $1,771.0 million, respectively. The earliest expiration date for any significant net operating losses that do not have a valuation allowance is 2028, during which $50.3 million of net operating losses would expire if not utilized. The remaining net operating losses have either a valuation allowance or indefinite carryforward periods. At December 31, 2016 and 2015, the Company also recognized a deferred tax asset associated with tax credits of $100.9 million and $77.5 million, respectively. The earliest expiration date for the tax credits is 2023 during which $19.7 million would expire if not utilized. However, these net operating losses and tax credits, other than the net operating losses and tax credits for which there is a valuation allowance, are expected to be utilized in the normal course of business during the period allowed for carryforwards and in any event, are not expected to be lost, due to the application of tax planning strategies that the Company would utilize.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is under continuous examination by the Internal Revenue Service and is subject to audit by taxing authorities in other foreign jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years prior to 2011 and with a few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years prior to 2010.

As of December 31, 2016, the Company’s total amount of unrecognized tax benefits was $297.3 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was $30.3 million. Management believes there will be no material impact to the Company’s effective tax rate related to unrecognized tax benefits over the next 12 months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014, is as follows (dollars in thousands):



	Total Unrecognized Tax Benefits
	2016			2015			2014
Beginning balance, January 1	$	296,213		$	274,661		$	279,801
Additions for tax positions of prior years	226,720			26,170			17,431
Reductions for tax positions of prior years	(229,719		)	(7,820		)	(26,001		)
Additions for tax positions of current year	4,186			3,396			3,430
Settlements with tax authorities	(110		)	(194		)	—
Ending balance, December 31	$	297,290		$	296,213		$	274,661

The Company recognized interest expense (benefit) associated with uncertain tax positions in 2016, 2015 and 2014 of $(8.4) million, $8.2 million and $(36.6) million, respectively. Additionally, the Company recognized penalties of $0.3 million for 2016. As of December 31, 2016 and 2015, the Company had $20.4 million and $28.8 million, respectively, of accrued interest related to unrecognized tax benefits.