Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Before Income Taxes

Polaris’ income from continuing operations before income taxes was generated from its United States and foreign operations as follows (in thousands):

	For the Years Ended December 31,
	2016		2015		2014
United States	$	262,403	$	640,604	$	666,323
Foreign	50,848		45,133		32,994
Income from continuing operations before income taxes	$	313,251	$	685,737	$	699,317

Components of Provision for Income Taxes

Components of Polaris’ provision for income taxes for continuing operations are as follows (in thousands):

	For the Years Ended December 31,
	2016			2015			2014
Current:
Federal	$	103,717		$	211,017		$	255,299
State	4,780			16,609			20,438
Foreign	17,367			20,733			21,584
Deferred	(25,561		)	(17,983		)	(52,033		)
Total provision for income taxes for continuing operations	$	100,303		$	230,376		$	245,288

Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate

Reconciliation of the Federal statutory income tax rate to the effective tax rate is as follows:

	For the Years Ended December 31,
	2016		2015		2014
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.4		1.5		1.5
Domestic manufacturing deduction	(2.1	)	(0.8	)	(1.1	)
Research and development tax credit	(4.3	)	(3.1	)	(1.1	)
Valuation allowance for foreign subsidiaries net operating losses	—		0.2		—
Non-deductible expenses	2.4		0.4		0.3
Other permanent differences	(0.4	)	0.4		0.5
Effective income tax rate for continuing operations	32.0	%	33.6	%	35.1	%

Net Deferred Income Taxes

The net deferred income taxes consist of the following (in thousands):

	December 31,
	2016			2015
Deferred income taxes:
Inventories	$	13,252		$	10,047
Accrued expenses	152,798			107,767
Derivative instruments	(175		)	(1,112		)
Cost in excess of net assets of business acquired	(10,257		)	(7,956		)
Property and equipment	(56,240		)	(28,853		)
Compensation payable in common stock	73,297			67,222
Net operating loss carryforwards and impairments	13,650			12,374
Valuation allowance	(6,981		)	(6,684		)
Total net deferred income tax asset	$	179,344		$	152,805

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

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

	For the Years Ended December 31,
	2016			2015
Balance at January 1,	$	22,509		$	9,836
Gross increases for tax positions of prior years	3,065			9,683
Gross increases for tax positions of current year	4,672			4,961
Decreases due to settlements and other prior year tax positions	(3,424		)	(178		)
Decreases for lapse of statute of limitations	(1,782		)	(1,364		)
Currency translation effect on foreign balances	(39		)	(429		)
Balance at December 31,	25,001			22,509
Reserves related to potential interest at December 31,	1,389			907
Unrecognized tax benefits at December 31,	$	26,390		$	23,416