INCOME TAXES

The components of income (loss) before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):



	2016		2015			2014
Domestic	$	37,316	$	40,176		$	(87,179	)
Foreign	12,667		(3,076		)	2,429
Income (loss) before taxes from continuing operations	$	49,983	$	37,100		$	(84,750	)

The provision for (benefit of) income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):



	2016			2015			2014
Current:
U.S. Federal	$	14,703		$	12,294		$	1,684
State	2,987			2,010			1,265
Foreign	3,467			1,371			733
Total current	21,157			15,675			3,682
Deferred:
U.S. Federal	(5,404		)	(178		)	(6,373		)
State	1,595			273			(203		)
Foreign	(1,084		)	(2,146		)	(64		)
Total deferred	(4,893		)	(2,051		)	(6,640		)
Provision for income taxes	$	16,264		$	13,624		$	(2,958	)

The (benefit of) provision for income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):



	2016			2015			2014
Current:
U.S. Federal	$	(24	)	$	(15	)	$	(18	)
State	(2		)	(1		)	(1		)
Foreign	—			—			—
(Benefit of) provision for income taxes	$	(26	)	$	(16	)	$	(19	)

The provision for income taxes from continuing operations differs from the federal statutory rate of 35% for the years ended December 31 due to the following (in thousands):



	2016					2015					2014
Statutory rate	$	17,494		35.0	%	$	12,985		35.0	%	$	(29,664	)	35.0	%
Intangible asset impairment	341			0.7	%	—			—	%	26,637			(31.4	)%
State taxes, less federal effect	3,033			6.1	%	1,845			5.0	%	606			(0.7	)%
Change in valuation allowance	685			1.4	%	284			0.7	%	94			(0.1	)%
Non-deductible expenses	556			1.1	%	2			—	%	233			(0.3	)%
Federal tax credits	(439		)	(0.9	)%	(242		)	(0.7	)%	(255		)	0.3	%
Uncertain tax positions	(154		)	(0.3	)%	(344		)	(0.9	)%	(169		)	0.2	%
Foreign rate differential	(677		)	(1.4	)%	(6		)	—	%	(311		)	0.4	%
Worthless stock deduction	(868		)	(1.7	)%	—			—	%	—			—	%
Domestic manufacturer's deduction	(1,363		)	(2.7	)%	(795		)	(2.1	)%	(60		)	0.1	%
Intercompany debt discharge	(2,389		)	(4.8	)%	—			—	%	—			—	%
Other	45			—	%	(105		)	(0.3	)%	(69		)	—	%
	$	16,264		32.5	%	$	13,624		36.7	%	$	(2,958	)	3.5	%

Deferred tax liabilities (assets) at December 31 consist of the following (in thousands):



	2016			2015
Depreciation	$	17,367		$	18,667
Goodwill	43,562			36,058
Intangible assets	14,731			19,291
Other	892			1,742
Gross deferred tax liabilities	76,552			75,758
Equity compensation	(21,439		)	(13,023		)
Other	(18,473		)	(20,847		)
Gross deferred tax assets	(39,912		)	(33,870		)
Valuation allowances	1,362			766
Deferred tax assets, net of valuation allowances	(38,550		)	(33,104		)
Net deferred tax liabilities	$	38,002		$	42,654

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. The following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):



	2016			2015			2014
Balance as of January 1	$	766		$	400		$	306
Cost charged to the tax provision	983			286			144
Reductions	(338		)	(78		)	(50		)
Purchase accounting adjustment and divestiture	—			158			—
Currency translation	(49		)	—			—
Balance as of December 31	$	1,362		$	766		$	400

The Company made net payments for income taxes for the following amounts for the years ended December 31 (in thousands):



	2016			2015			2014
Payments made for income taxes, net	$	(17,700	)	$	(11,879	)	$	(6,509	)

Provision has not been made for U.S. taxes on $28,751,000 of undistributed earnings of foreign subsidiaries. Those earnings have been and will continue to be indefinitely reinvested. As of December 31, 2016, the Company’s foreign operations held $26,351,000 of cash that provides foreign operations with liquidity to reinvest in working capital and capital expenditures for their operations. Any excess earnings could be used to grow the Company’s foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to the complexities associated with its hypothetical calculation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	2016			2015			2014
Balance as of January 1	$	3,876		$	1,414		$	1,694
Additions for tax positions of the current year	33			148			180
Additions for tax positions of prior years	—			2,955			93
Reductions for tax positions of prior years for:
Settlements and changes in judgment	(256		)	(331		)	(154		)
Lapses of applicable statute of limitations	—			(310		)	(399		)
Divestitures and foreign currency translation	(187		)	—			—
Balance as of December 31	$	3,466		$	3,876		$	1,414

The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to ten years. Currently, the Company is under examination in Germany for 2009 through 2012. The Company's U.S. federal consolidated income tax return remains subject to examination for 2014, 2015 and 2016.

$636,000 and $859,000 of unrecognized tax benefits would affect the effective tax rate, if recognized as of December 31, 2016 and 2015. $2,830,000 and $3,017,000 of unrecognized tax benefits related to the acquisition of RBI on June 9, 2015, if recognized would be offset by an equal indemnification asset at December 31, 2016 and 2015. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense. Interest (net of federal tax benefit) and penalties recognized during the years ended December 31 were (in thousands):



	2016			2015			2014
Interest and penalties recognized as income	$	(122	)	$	(87	)	$	(28	)

At December 31, 2016, the Company had net operating loss carry forwards for federal, state, and foreign income tax purposes totaling $23,284,000. The federal and state net operating loss carry forwards will expire between 2016 and 2036. The foreign net operating loss carry forwards have an indefinite carry forward period. The Company recognized $1,737,000 of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances.