10.	INCOME TAXES

For financial reporting purposes, income from continuing operations before income taxes includes the following components, in thousands:

	Year Ended December 31,
	2016		2015		2014
Income from continuing operations before income taxes:
United States	$	148,055	$	164,282	$	65,176
Foreign		111,757		134,391		142,114
	$	259,812	$	298,673	$	207,290

Components of income tax expense, in thousands, were as follows:

	Year Ended December 31,
	2016			2015			2014
Current income tax expense:
Federal	$	62,499		$	54,447		$	56,624
State		8,392			8,942			7,380
Foreign		25,743			35,438			35,307
		96,634			98,827			99,311
Deferred income tax expense (benefit):
Federal		(26,231	)		10,620			(20,735	)
State		(2,248	)		878			(2,429	)
Foreign		(1,732	)		(2,568	)		(3,468	)
		(30,211	)		8,930			(26,632	)
Total income tax expense attributed to continuing operations	$	66,423		$	107,757		$	72,679

A reconciliation of income tax expense computed at statutory tax rates compared to effective income tax rates was as follows:

	Year Ended December 31,
	2016			2015			2014
Statutory rate		35.0	%		35.0	%		35.0	%
Federal tax credits		(0.3	)%		(0.3	)%		(1.8	)%
Uncertain tax positions		(0.4	)%		3.3	%		0.4	%
Foreign rate differential		(7.3	)%		(4.7	)%		(9.0	)%
Foreign deferred tax liability on unremitted earnings		(4.0	)%		0.5	%		8.0	%
State income taxes, net of Federal benefit		2.1	%		1.9	%		2.1	%
Other		0.5	%		0.4	%		0.4	%
Effective income tax rates from continuing operations		25.6	%		36.1	%		35.1	%

The decrease in the effective tax rate in 2016 was primarily due to two factors. First, a legal entity restructuring that was completed during the fourth quarter of 2016 resulted in a more efficient manner to repatriate foreign earnings in the future, and therefore, decreased the net U.S. deferred tax liability on unremitted foreign earnings. Second, during 2016 there were no significant changes recorded to the liability accrued for uncertain tax positions, so such liability had a less significant impact on 2016’s effective tax rate.

The increase in the effective tax rate in 2015 was primarily due to increases related to the mix of income by country, accruals for uncertain tax positions and reduced federal jobs credits, partially offset by lower deferred tax on foreign unremitted earnings resulting from our international acquisitions in 2015.

The Company’s effective income tax rate from discontinued operations for the years ended December 31, 2016, 2015 and 2014 was 0.0%, (0.7%) and (10.0%), respectively. The Company recognized a $21.6 million and $8.6 million tax benefit in 2015 and 2014, respectively, due to the deferred tax benefit associated with excess outside basis over financial reporting basis from the divestiture of several of our agent-based businesses, resulting in a negative effective tax rate.

The countries having the greatest impact on the tax rate adjustment line shown in the above table as “Foreign rate differential” for the years ended December 31, 2016, 2015 and 2014 were Australia, Netherlands, Singapore and the United Kingdom.

In 2016, 2015, and 2014, income tax benefits attributable to employee stock option transactions of $4.8 million, $4.2 million and $1.2 million, respectively, were allocated to stockholders’ equity.

Significant temporary differences between reported financial and taxable earnings that give rise to deferred income tax assets and liabilities, in thousands, were as follows:

	Year Ended December 31,
	2016			2015
Deferred income tax assets:
Net operating loss carryforwards	$	107,813		$	111,288
Compensation and benefit plans		47,204			44,813
Accrued expenses		30,693			28,179
Deferred Revenue		14,076			10,984
Tax credits		13,882			13,882
Foreign currency translation		—			2,183
Allowance for doubtful accounts		3,045			3,796
Reserves not currently deductible for tax purposes		4,258			4,404
Gross deferred income tax assets		220,971			219,529
Less valuation allowance		(102,590	)		(100,205	)
Total deferred income tax assets	$	118,381		$	119,324
Deferred income tax liabilities:
Acquired intangibles amortization	$	136,639		$	139,137
Foreign earnings		18,373			33,597
Excess tax depreciation over financial depreciation		44,401			42,634
Prepaid expenses		7,383			7,553
Other		412			625
Foreign currency translation		37			—
Total deferred income tax liabilities		207,245			223,546
Net deferred income tax liability	$	88,864		$	104,222

At December 31, 2016, we had federal and foreign net operating loss (“NOL”) carryforwards in the amount of $281.6 million which resulted in a net deferred tax asset of $16.0 million which is available to reduce future taxes. The NOL carryforwards are attributable to acquired and foreign companies. NOLs and tax credit carryforwards expire in periods starting 2017 through 2031. The valuation allowances, which reduce deferred tax assets to an amount that will more likely than not be realized, were $102.6 million at December 31, 2016 and $100.2 million at December 31, 2015. Our valuation allowance increased by $2.4 million in 2016 on a net basis as a result of the following: releasing valuation allowances related to the utilization of NOLs during the year that had full valuation allowances, planning related to the utilization of future NOLs, current year foreign NOLs and the expiration of the NOL carryover period.

We have historically determined that a portion of undistributed earnings of our foreign subsidiaries will be repatriated to the United States, and accordingly, we have provided a deferred tax liability totaling $18.4 million and $33.6 million at December 31, 2016 and 2015, respectively, on such foreign source income. For the years ended December 31, 2016 and 2015, we have accrued U.S. income taxes on $108.1 million and $168.1 million, respectively, of unremitted foreign earnings and profits. At December 31, 2016, we have determined we have foreign earnings of approximately $207.3 million which will be permanently reinvested, and therefore deferred income taxes of approximately $22.8 million have not been provided on such foreign subsidiary earnings.

In preparing our tax returns, we are required to interpret complex tax laws and regulations. On an ongoing basis, we are subject to examinations by federal and state tax authorities that may give rise to different interpretations of these complex laws and regulations. The number of tax years that remain open and subject to tax audits varies depending upon the tax jurisdiction. Our most significant taxing jurisdictions include the U.S., United Kingdom and France. The Company files income tax returns in the U.S. and various states as well as foreign jurisdictions. Tax years 2010 and forward remain open under U.S. statutes of limitation. Due to the nature of the examination process, it generally takes years before these examinations are completed and matters are resolved. At December 31, 2016, we were under examination by the U.S. Internal Revenue Service for tax years 2010, 2011, 2012 and 2013. At December 31, 2016, we believe the aggregate amount of any additional tax liabilities that may result from examinations, if any, will not have a material adverse effect on our financial condition, results of operations or cash flows.

The following summarizes the activity related to our unrecognized tax benefits recorded in accordance with ASC 740-10 in 2016, 2015 and 2014, in thousands:

	For the year ended December 31,
	2016			2015			2014
Beginning balance	$	28,959		$	23,807		$	22,680
Increases for positions taken in current year		327			1,768			580
Increases for positions taken in prior years		2,740			4,241			4,318
Decreases for positions taken in prior years		—			—			(2,243	)
Decrease due to settlements with taxing authorities		—			(440	)		(1,528	)
Expiration of the statute of limitations for the assessment of taxes		(1,140	)		(417	)		—
Ending balance	$	30,886		$	28,959		$	23,807

The unrecognized tax benefits at December 31, 2016 were $30.9 million of tax benefits that, if recognized, would affect our effective tax rate. We recognize interest related to unrecognized tax benefits and penalties as income tax expense. Total interest and penalties recognized as part of income tax expense (benefit) were $(2.9) million, $5.1 million and $(0.2) million for December 31, 2016, 2015 and 2014, respectively. At December 31, 2016 and 2015, the aggregate recorded liability for interest and potential penalties was $13.2 million and $16.1 million, respectively. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.