17. INCOME TAXES

The components of (loss) income before income taxes and loss in equity interests are as follows:


	Year Ended December 31,
	2014			2013			2012
Domestic	$	(326,935	)	$	31,291		$	11,833
Foreign		7,915			(3,870	)		14,436

(Loss) income before income taxes and loss in equity interests	$	(319,020	)	$	27,421		$	26,269

Income taxes relating to the Company’s operations are as follows:


	Years Ended December 31,
	2014			2013			2012
Current income taxes:
U.S. Federal	$	2,018		$	2,814		$	(40,306	)
State and local		(692	)		(1,357	)		(1,668	)
Foreign		6,801			(7,027	)		18,810

Total current income taxes		8,127			(5,570	)		(23,164	)
Deferred income taxes:
U.S. Federal		(35,661	)		24,513			(2,495	)
State and local		(9,622	)		5,766			(2,975	)
Foreign		1,865			(1,705	)		(4,344	)

Total deferred income taxes		(43,418	)		28,574			(9,814	)

(Benefit from) provision for income taxes	$	(35,291	)	$	23,004		$	(32,978	)

The tax effects of temporary differences that give rise to the Company’s deferred tax assets and liabilities are as follows:


	December 31,
	2014			2013
Deferred tax assets:
Allowance for doubtful accounts	$	941		$	1,310
Accrued expenses and other liabilities		9,731			6,038
Tax loss carry-forwards		71,916			67,892
Tax credits		55,312			48,843
Non-cash stock based compensation expense		6,552			4,379
Valuation allowance		(69,807	)		(48,906	)

Deferred tax assets		74,645			79,556

Deferred tax liabilities:
Foreign investments		(12,166	)		(9,606	)
Property and equipment		(25,018	)		(24,956	)
Goodwill and intangibles		(11,199	)		(60,941	)

Deferred tax liabilities		(48,383	)		(95,503	)

Net deferred tax assets (liabilities)	$	26,262		$	(15,947	)

As of December 31, 2014 and 2013, net current deferred tax assets were $1,995 and $627, respectively, net current deferred tax liabilities were $0 and $49, respectively, net non-current deferred tax assets were $24,267 and $20,405, respectively, and net non-current deferred tax liabilities were $0 and $36,930, respectively.

At December, 31, 2014, the Company has United States Federal net operating tax losses of approximately $35,730 which it expects to carry forward as no carry-back refunds are available. The losses expire in stages beginning in 2031. The Company has U.S. foreign tax credit carryovers and research and experimentation tax credit carryovers of $51,580 and $3,646, respectively, that expire in stages beginning in 2016 through 2024 and 2029 through 2034, respectively. The Company has net operating loss carry-forwards in various foreign countries around the world of approximately $226,000, approximately $172,000 of which have no expiration date and $54,000 of which expire in stages in years 2015 through 2029. The Company realized a cash benefit relating to the use of its tax loss carry-forwards of $0 and $25,122 in 2014 and 2013, respectively.

Utilization of our net operating losses and tax credit carry-forwards may be subject to substantial annual limitations due to the ownership change limitations provided by the United States Internal Revenue Code. Such annual limitations could result in the expiration of the net operating loss and tax credit carry-forwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change of greater than 50% over a three year period.

Realization of the Company’s net deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from attribute carry-forwards which include losses and tax credits. In assessing the need for a valuation allowance, the Company has considered all positive and negative evidence including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. Since this evaluation requires considerable judgment and consideration of events that may occur in future years, our conclusion could be materially different if certain of our expectations do not occur. To the extent actual results are different, it may require a material charge to income in the period in which such events occur.

The Company has concluded that it is more likely than not that certain deferred tax assets will not be realized, principally net operating losses in certain foreign jurisdictions, and a portion of the carryovers of foreign tax credits. Determining the amount of required valuation allowances necessitates significant judgment. We review utilization of tax assets on a jurisdiction by jurisdiction basis and consider such factors as recent operating history and future business forecasts. In making this assessment we give greater weight to evidence that is objectively verifiable comprising primarily of past operating history and reversing taxable differences. Operations in certain countries have a long history of continual tax losses, so a valuation allowance has been recorded on all of their deferred tax assets.

In order to realize its deferred tax asset for foreign tax credit carryovers the Company is required to have sufficient U.S. taxable income, and sufficient “foreign source” income as defined by the U.S. tax code, regulations and interpretations thereunder. In evaluating future realization of deferred tax assets for foreign tax credit carryovers the Company forecasts future income levels and characterization thereof. The Company prepares tax credit realization models using varying scenarios and assumptions, and considers qualifying tax planning strategies. At December 31, 2014, the total carryover over for foreign tax credits is $51,580. The Company believes it is more likely than not to not realize approximately $21,000 of foreign tax credit carryovers before their expiration, thus in 2014 the Company recorded an increase to the valuation allowance by approximately $18,000 ($16,000 of which was recorded in the fourth quarter of 2014). The portion of the total recorded valuation allowances recorded at December 31, 2014 and 2013 related to this item was approximately $21,000 and $3,000 respectively.

The income tax provision from continuing operations was increased by $25,123, $5,221 and $5,991 in 2014, 2013 and 2012, respectively, due to valuation allowances, $21,347, $1,691 and $3,000 of which related to deferred tax assets that existed at the beginning of the respective years. The valuation allowance decreased by $4,222 in 2014 due to expiration of losses with full valuation allowances and deconsolidation of certain subsidiaries with tax valuation allowances (see Note 11 – Deconsolidation of Subsidiaries). The valuation allowance decreased $4,472 in 2013 primarily due to the effect of enacted reductions in the tax rates on deferred tax assets with a full valuation allowance, or expiration of tax losses with a full valuation allowance, and was increased by $3,379 in 2012 due reversals of unrecognized tax benefits with full valuation allowances. These items did not result in a net charge or benefit to the tax provision.

Income taxes related to the Company’s (loss) income before income taxes and loss in equity interests differ from the amount computed using the Federal statutory income tax rate as follows:


	Year Ended December 31,
	2014			2013			2012
Income taxes at Federal statutory rate	$	(111,655	)	$	9,598		$	9,195
State income taxes, net of Federal income tax effect		(13,767	)		1,152			217
Foreign tax rate differences		308			3,510			1,655
Change in valuation allowance		20,901			749			9,370
Reversals of accrued income tax		(1,143	)		(12,391	)		(28,814	)
Interest expense on tax liabilities, net of reversals		710			(189	)		(3,517	)
Earnings not indefinitely reinvested		—			676			1,303
Non-deductible compensation and other expenses		952			1,506			1,095
Effect of foreign partnerships and joint venture		4,090			—			—
Tax effect of restructuring items		—			—			(21,754	)
Effect of intercompany loans		392			250			(1,728	)
Non-deductible goodwill impairment		65,938
Research and experimentation tax credit		(2,017	)
Sale of noncontrolling interest		—			18,143			—

(Benefit from) provision for income taxes	$	(35,291	)	$	23,004		$	(32,978	)

For the years ended December 31, 2014, 2013 and 2012, the Company has recorded a tax (benefit) provision in discontinued operations of $0, ($6,407) and $1,624, respectively. The 2012 amount includes a provision of $9,710 for valuation allowances on recorded deferred tax assets relating to Careers-China (see Note 7 – Discontinued Operations). In the years ended December 31, 2014, 2013 and 2012, the discontinued operation tax provision include tax benefits of $0, $540 and $8,086, respectively, on certain tax losses in discontinued operations that pass through to continuing operations due to the form of ownership.

In the fourth quarter of 2014, the Company recorded a pre-tax charge for impairment of goodwill in the amount of $325,800. The Company recorded a deferred tax benefit of $62,753 with respect to the portion of impaired goodwill which is deductible for tax purposes (see Note 5 – Goodwill and Intangible Assets).

In 2014, the tax provision was increased by $5,543 due to a gain of $11,828 related to the deconsolidation of the Company’s subsidiaries in Poland, Hungary and the Czech Republic (see Note 11 – Deconsolidation of Subsidiaries).

In November 2013, the Company entered in to an agreement to sell a 49.99% interest in JobKorea Ltd., its wholly owned subsidiary in South Korea, to H&Q Korea for an aggregate purchase price of $90,000 (see Note 3 – Noncontrolling Interest). The transaction, which is accounted for as a sale of a noncontrolling interest, resulted in a sale for tax purposes. A tax provision of $30,853 was recorded on the transaction of which $12,709 was charged to stockholder’s equity and $18,143 was charged to the continuing operations tax provision. The Company utilized its existing U.S. tax operating loss carryovers to offset the tax liability that would otherwise be due on the transaction. As a result of the sale, the remaining 50.01% investment retained by the Company is characterized as a partnership for U.S. tax reporting purposes. Accordingly, the Company’s share of earnings is taxable in the United States, as if distributed. In 2014, 2013 and 2012, the Company repatriated approximately $3,121, $13,385 and $38,000, respectively, of cash from its subsidiary in South Korea.

A provision has not been made for United States or additional foreign taxes on substantially all undistributed earnings of foreign subsidiaries as the Company plans to utilize these undistributed earnings to finance expansion or operating requirements of subsidiaries outside of the United States or due to local country restrictions. Such earnings will continue to be indefinitely reinvested but could become subject to additional tax if they were remitted as dividends or were loaned to the Company or United States affiliates, or if the Company should sell its stock in the foreign subsidiaries. Due to various complexities in computing the residual U.S. tax liability, particularly when the timing or form of future repatriations has not been determined, it is not practicable to determine the amount of additional tax, if any, that might be payable on undistributed foreign earnings. The Company estimates its undistributed foreign earnings for which deferred taxes have not been provided are approximately $26,000.

As of December 31, 2014 and 2013, the Company has recorded a liability for $54,636 and $53,078, respectively, which includes unrecognized tax benefits of $30,389 and $30,005, respectively, and estimated accrued interest and penalties of $24,247 and $23,074, respectively. Interest and penalties related to underpayment of income taxes are classified as a component of the (benefit from) provision for income taxes in the Company’s consolidated statement of operations. Interest accrued on unrecognized tax benefits included in the 2014, 2013 and 2012 income tax provision in the statement of operations was $2,695, $2,932, and $3,794, respectively. In 2014, 2013 and 2012 interest expense was recorded net of reversals of prior years’ interest and penalties of $1,523, $3,248, and $9,609, respectively. The net of tax effect of interest, penalties and reversals was a charge of $710 in the year ended December 31, 2014, and a credit of $189 and $3,517 in the years ended December 31, 2013 and 2012, respectively.

A reconciliation of the total amount of unrecognized tax benefits is as follows:


	2014			2013			2012
Balance, beginning of period	$	30,005		$	40,075		$	76,818
Gross increases: tax positions taken in prior periods		—			515			8,380
Gross decreases: tax positions taken in prior periods		(1,040	)		(13,042	)		(8,943	)
Gross increases: tax positions taken in current year		2,911			2,457			3,114
Gross decreases: tax positions taken in current year		—			—			—
Gross decreases: settlement of tax examinations		—			—			(39,294	)
Gross decreases: lapse of statute of limitation		(1,487	)		—			—

Balance, end of period	$	30,389		$	30,005		$	40,075

If the unrecognized tax benefits at December 31, 2014, 2013 and 2012 were recognized in full, $30,389, $30,005, and $40,075, respectively, would impact the effective tax rate.

During 2014, the Company recognized previously unrecognized tax positions of $2,525 which on a net of tax basis favorably impacted the effective rate by $1,143, primarily as a result of lapses of statutes of limitations. The Company also reversed accrued interest on unrecognized tax positions of $1,523, which favorably impacted the effective rate by $921. The tax matters reversed relate primarily to allocation of income among tax jurisdictions.

During 2013, the Company recognized previously unrecognized tax positions of $12,979 which on a net of tax basis favorably impacted the effective rate by $12,391 as a result of settlements of tax examinations and lapses of statutes of limitations. The Company also reversed accrued interest on unrecognized tax positions of $3,248, which favorably impacted the effective rate by $1,963. The tax matters reversed relate primarily to characterization of certain intercompany loans for tax purposes and allocation of income among jurisdictions.

During 2012, the Company completed a tax examination with the United States Internal Revenue Service which covered the tax years 2006 through 2009. As a result of settlement of this tax examination the Company recognized previously unrecognized tax benefits of $38,024 and reversed an asset for recoverable foreign taxes of $7,956 both of which, on a net of tax basis, impacted the effective rate by $29,059. The Company also recognized previously unrecognized tax benefits of $5,680 which were offset in full by a valuation allowance and had no net effect on the tax provision. The Company also reversed accrued interest related to unrecognized tax benefits of $8,034 which, on a net of tax basis, impacted the effective rate by $4,860. The tax matters recognized related to the allocation of income among tax jurisdiction and the benefits related to certain tax net operating losses. In addition, the Company settled certain state and local tax examinations and revised certain estimates to prior accrued state liabilities. As a result, the Company recognized $1,806 of previously unrecognized tax benefits and reversed accrued interest related to these unrecognized benefits of $1,575 which together on a net of tax basis impacted the effective tax rate by $2,128. Additionally, the Company increased its tax provision for unrecognized tax benefits of $7,100 relating to an ongoing international tax examination. The total effect on the tax provision for the year ended December 31, 2012, due to adjustments of prior accruals and settlement of tax examinations, was a tax benefit of $28,814, a benefit for reversal of interest of $5,814, and a provision for recording a valuation allowance of $5,680.

The Company conducts business globally and as a result, the Company or one or more subsidiaries is subject to United States federal income taxes and files income tax returns in various states and approximately 40 foreign jurisdictions. In the normal course of business, the Company is subject to tax examinations by taxing authorities including major jurisdictions such as Germany, United Kingdom, and the United States as well as other countries in Europe and the Asia/Pacific region. The Company is generally no longer subject to examinations with respect to returns that have been filed for years prior to 2010 in Germany, 2012 in the United Kingdom, and 2011 in the United States. Tax years are generally considered closed from examinations when the statute of limitations expires. The United States Internal Revenue Service has recently completed an income tax examination through tax year 2011 which resulted in no material changes.

The Company estimates that it is reasonably possible that unrecorded tax benefits may be reduced by an amount ranging from $0 to $15,000 in the next twelve months due to expirations of statutes of limitations or settlement of examinations. The tax matters relate to allocation of income between tax jurisdictions and the amount of tax loss carryovers.