16.	Income Taxes

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

	Year Ended December 31,
	2015			2014			2013
Current:
Domestic	$	22,943		$	30,415		$	31,220
Foreign		4,324			3,740			1,706
Total current		27,267			34,155			32,926

Deferred:
Domestic		(1,210	)		(4,732	)		(1,178	)
Foreign		(74	)		(569	)		171
Total deferred		(1,284	)		(5,301	)		( 1,007	)
Total income tax provision	$	25,983		$	28,854		$	31,919

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. Provision has been made for U.S. income taxes on the current earnings of our Canadian subsidiary as dividends are expected to be received from Canada related to these earnings. Cumulative undistributed earnings of foreign subsidiaries on which no U.S. income tax has been provided were $41.5 million at the end of 2015, $35.2 million at the end of 2014 and $25.5 million at the end of 2013. Earnings before income taxes for foreign operations amounted to approximately $14.7 million, $11.6 million and $6.4 million in 2015, 2014 and 2013, 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,
	2015			2014			2013

U.S. Federal income tax rate of 35%	$	25,936		$	28,614		$	29,737
Increase (decrease) in tax rate resulting from:
State and local income taxes, net of federal income tax benefit		1,857			2,309			2,936
Income tax (tax benefits) attributable to foreign income		(1,705	)		(1,511	)		(428	)
Change in unrecognized tax benefits		—			(350	)		—
Other non-deductible items, net		(192	)		134			(806	)
Change in valuation allowance		87			(342	)		480
Provision for income taxes	$	25,983		$	28,854		$	31,919

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,
	2015			2014
Deferred tax assets:
Inventories	$	17,651		$	17,529
Allowance for customer returns		14,551			11,409
Postretirement benefits		1,127			2,155
Allowance for doubtful accounts		1,512			2,347
Accrued salaries and benefits		9,683			10,802
Capital loss		234			234
Tax credit carryforwards		381			313
Deferred gain on building sale		891			1,299
Accrued asbestos liabilities		13,098			13,625
		59,128			59,713
Valuation allowance (1)		(440	)		(353	)
Total deferred tax assets		58,688			59,360
Deferred tax liabilities:
Depreciation		7,054			7,023
Promotional costs		230			124
Other		41			738
Total deferred tax liabilities		7,325			7,885

Net deferred tax assets	$	51,363		$	51,475

(1)

Current net deferred tax assets are $40.6 million and $36.6 million for 2015 and 2014, respectively. Non-current net deferred tax assets are $10.7 million and $14.9 million for 2015 and 2014, respectively. The tax valuation allowance was allocated to long term deferred tax assets in the amounts of $0.4 million in both 2015 and 2014. None of the valuation allowance was allocated to current deferred tax assets in 2015 and 2014.

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, 2015 was intended to provide for uncertainty regarding the ultimate realization of our U.S. foreign 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 $51.4 million as of December 31, 2015, which was net of the remaining valuation allowance.

At December 31, 2015, we have foreign tax credit carryforwards of approximately $0.4 million that will expire in varying amounts by 2024.

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

Balance at January 1, 2014	$	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		—
Increase based on tax positions taken in the current year		—
Decrease based on tax positions taken in the current year		—
Balance at December 31, 2015	$	—

The amount of uncertain tax positions recognized in 2014 reduced our 2014 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, 2015, the Company is no longer subject to U.S. Federal tax examinations for years before 2012. We remain subject to examination by state and local tax authorities for tax years 2011 through 2015. 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 (2011 onward), Hong Kong (2010 onward) and Poland (2010 onward). We do not presently anticipate that our unrecognized tax benefits will significantly increase or decrease over the next 12 months; however, actual developments in this area could differ from those currently expected.