Income Taxes

Income before income taxes includes the following components:



	Year Ended December 31,
(in thousands)	2016		2015		2014
Domestic	$	340,251	$	325,097	$	291,042
Foreign	40,064		31,668		57,097
Total	$	380,315	$	356,765	$	348,139

The provision for income taxes is composed of the following:



	Year Ended December 31,
(in thousands)	2016			2015			2014
Current:
Federal	$	99,783		$	93,853		$	80,620
State	8,338			7,733			7,192
Foreign	17,479			17,854			24,495
Deferred:
Federal	(13,368		)	(14,472		)	(18,536		)
State	(1,036		)	(1,987		)	(1,915		)
Foreign	3,483			1,263			1,593
Total	$	114,679		$	104,244		$	93,449

The reconciliation of the U.S. federal statutory tax rate to the consolidated effective tax rate is as follows:



	Year Ended December 31,
	2016		2015		2014
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.6		1.1		1.2
Uncertain tax positions	(0.2	)	(0.4	)	(0.9	)
Research and development credits	(1.0	)	(1.1	)	(1.1	)
Benefit from restructuring activities	(2.2	)	(2.7	)	(4.1	)
Domestic production activity benefit	(3.7	)	(3.1	)	(3.5	)
Other	0.7		0.4		0.2
	30.2	%	29.2	%	26.8	%

In general, it is the practice and intention of the Company to repatriate previously taxed earnings and to reinvest all other earnings of its non-U.S. subsidiaries. The Company has not made a provision for U.S. taxes on approximately $199 million, representing the excess of the amount for financial reporting over the tax bases of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. The residual U.S. tax cost associated with this difference is estimated to be $35 million.

The components of deferred tax assets and liabilities are as follows:



	December 31,
(in thousands)	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	32,969		$	40,939
Stock-based compensation	23,652			23,258
Employee benefits	17,187			17,044
Uncertain tax positions	11,562			10,233
Deferred revenue	6,382			8,603
Research and development credits	3,889			3,562
Allowance for doubtful accounts	2,078			1,888
Other	3,163			3,240
Valuation allowance	(1,625		)	(603		)
	99,257			108,164
Deferred tax liabilities:
Other intangible assets	(56,195		)	(73,933		)
Property and equipment	(2,994		)	(3,426		)
	(59,189		)	(77,359		)
Net deferred tax assets	$	40,068		$	30,805

The Company excluded from the above table a $13.2 million deferred tax asset associated with foreign net operating loss carryforwards and a corresponding $13.2 million valuation allowance in a jurisdiction where the Company determined utilization is remote.

The net increase in the gross valuation allowance was $1.0 million. This increase was primarily due to a change in circumstances related to the ability to utilize a net operating loss in a foreign jurisdiction. As of each reporting date, management considers new evidence, both positive and negative, that could affect the future realization of deferred tax assets. If management determines it is more likely than not that an asset, or a portion of an asset, will not be realized, a valuation allowance is recorded.

As of December 31, 2016, the Company had federal net operating loss carryforwards of $28.7 million. These losses expire between 2020 - 2034, and are subject to limitations on their utilization. Deferred tax assets of $1.2 million have been recorded for state operating loss carryforwards. These losses expire between 2017 - 2035, and are subject to limitations on their utilization. The Company had total foreign net operating loss carryforwards of $76.9 million, of which $28.2 million are not currently subject to expiration dates. The remainder, $48.7 million, expires between 2019 - 2025. The Company had tax credit carryforwards of $5.2 million, of which $3.0 million are subject to limitations on their utilization. Approximately $0.9 million of these tax credit carryforwards are not currently subject to expiration dates. The remainder, $4.3 million, expires in various years between 2017 - 2036.

The following is a reconciliation of the total amounts of unrecognized tax benefits:



	Year Ended December 31,
(in thousands)	2016			2015			2014
Unrecognized tax benefit as of January 1	$	16,067		$	16,342		$	19,590
Gross increases—tax positions in prior period	983			64			488
Gross decreases—tax positions in prior period	(2,502		)	(850		)	(3,715		)
Gross increases—tax positions in current period	2,725			4,064			2,513
Reductions due to a lapse of the applicable statute of limitations	(927		)	(2,808		)	(1,924		)
Changes due to currency fluctuation	(348		)	(653		)	(610		)
Settlements	(789		)	(92		)	—
Unrecognized tax benefit as of December 31	$	15,209		$	16,067		$	16,342

The Company believes that it is reasonably possible that approximately $0.1 million of uncertain tax positions may be resolved within the next twelve months as a result of settlement with a taxing authority or a lapse of the statute of limitations. Of the total unrecognized tax benefit as of December 31, 2016, $9.2 million would affect the effective tax rate, if recognized.

The Company recognizes interest and penalties related to income taxes as income tax expense. During the year ended December 31, 2016, the Company recorded $0.8 million of penalty expense and $0.1 million of interest benefit. As of December 31, 2016, the Company accrued a liability for penalties of $2.7 million and interest of $2.8 million. As of December 31, 2015, the Company accrued a liability for penalties of $1.9 million and interest of $2.7 million.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. In the U.S., the Company's only major tax jurisdiction, the 2013 - 2016 tax years are open to examination by the Internal Revenue Service.