16.	Income Taxes

The income tax provision (benefit) consists of the following (in thousands):

	Year Ended December 31,
	2014			2013			2012
Current:
Domestic	$	30,415		$	31,220		$	17,791
Foreign		3,740			1,706			1,362
Total current		34,155			32,926			19,153

Deferred:
Domestic		(4,732	)		(1,178	)		5,909
Foreign		(569	)		171			(84	)
Total deferred		(5,301	)		( 1,007	)		5,825
Total income tax provision	$	28,854		$	31,919		$	24,978

We have not provided for U.S. income taxes on the undistributed earnings of our foreign subsidiaries that are deferred from U.S. income taxation and that we intend to be permanently reinvested. Cumulative undistributed earnings of foreign subsidiaries on which no U.S. income tax has been provided were $35.2 million at the end of 2014, $25.5 million at the end of 2013 and $27.6 million at the end of 2012. Earnings before income taxes for foreign operations amounted to approximately $11.6 million, $6.4 million and $4.4 million in 2014, 2013 and 2012, respectively.

Reconciliations between taxes at the U.S. Federal income tax rate and taxes at our effective income tax rate on earnings from continuing operations before income taxes are as follows (in thousands):

	Year Ended December 31,
	2014			2013			2012

U.S. Federal income tax rate of 35%	$	28,614		$	29,737		$	23,781
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		2,309			2,936			2,021
Income tax (tax benefits) attributable to foreign income		(1,511	)		(428	)		(852	)
Change in unrecognized tax benefits		(350	)		—			—
Other non-deductible items, net		134			(806	)		697
Change in valuation allowance		(342	)		480			(669	)
Provision for income taxes	$	28,854		$	31,919		$	24,978

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the accompanying consolidated balance sheets (in thousands):

	December 31,
	2014			2013
Deferred tax assets:
Inventories	$	17,529		$	16,801
Allowance for customer returns		11,409			11,622
Postretirement benefits		2,155			2,446
Allowance for doubtful accounts		2,347			2,592
Accrued salaries and benefits		10,802			9,110
Capital loss		234			5,999
Tax credit carryforwards		313			695
Deferred gain on building sale		1,299			1,713
Accrued asbestos liabilities		13,625			9,780
		59,713			60,758
Valuation allowance (1)		(353	)		(6,694	)
Total deferred tax assets		59,360			54,064
Deferred tax liabilities:
Depreciation		7,023			7,583
Promotional costs		124			187
Other		738			383
Total deferred tax liabilities		7,885			8,153

Net deferred tax assets	$	51,475		$	45,911

(1)

Current net deferred tax assets are $36.6 million and $35.6 million for 2014 and 2013, respectively. Non-current net deferred tax assets are $14.9 million and $10.3 million for 2014 and 2013, respectively. The tax valuation allowance was allocated to long term deferred tax assets in the amounts of $0.4 million and $6.7 million in 2014 and 2013, respectively. None of the valuation allowance was allocated to current deferred tax assets in 2014 and 2013. The valuation allowance was reduced by $6 million due to the expiration of the statue of limitations relating to a capital loss carryover.

In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some portion or the entire deferred tax asset will be realized. Ultimately, the realization of the deferred tax asset is dependent upon the generation of sufficient taxable income in those periods in which temporary differences become deductible and/or net operating loss carryforwards can be utilized. We consider the level of historical taxable income, scheduled reversal of temporary differences, carryback and carryforward periods, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. We also consider cumulative losses in recent years as well as the impact of one-time events in assessing our pre-tax earnings. Assumptions regarding future taxable income require significant judgment. Our assumptions are consistent with estimates and plans used to manage our business.

The valuation allowance of $0.4 million as of December 31, 2014 was intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign tax credit carryovers, state investment tax credit carryovers and foreign net operating loss carryovers. Based on these considerations, we believed it was more likely than not that we would realize the benefit of the net deferred tax asset of $51.5 million as of December 31, 2014, which was net of the remaining valuation allowance.

At December 31, 2014, we have foreign tax credit carryforwards of approximately $0.3 million that will expire in varying amounts by 2022.

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

Balance at January 1, 2013	$	350
Increase based on tax positions taken in the current year		—
Decrease based on tax positions taken in the current year		—
Balance at December 31, 2013		350
Increase based on tax positions taken in the current year		—
Decrease based on tax positions taken in the current year		(350	)
Balance at December 31, 2014	$	—

The amount of uncertain tax positions recognized in the current year reduced our annual effective tax rate by 0.43%.

We are subject to taxation in the U.S. and various state, local and foreign jurisdictions. As of December 31, 2014, the Company is no longer subject to U.S. Federal tax examinations for years before 2011. We remain subject to examination by state and local tax authorities for tax years 2010 through 2014. Foreign jurisdictions have statutes of limitations generally ranging from 2 to 6 years. Years still open to examination by foreign tax authorities in major jurisdictions include Canada (2010 onward), Hong Kong (2009 onward) and Poland (2009 onward). We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease prior to September 15, 2015, the due date for the U.S. Federal tax return; however, actual developments in this area could differ from those currently expected.