15.INCOME TAXES

As discussed in Note 2, the Company began operating in compliance with REIT requirements for federal income tax purposes effective January 1, 2016. As a REIT, the Company must distribute at least 90 percent of its taxable income (including dividends paid to it by its TRSs) except to the extent offset by NOLs. In addition, the Company must meet a number of other organizational and operational requirements. It is management's intention to adhere to these requirements and maintain the Company's REIT status. Most states where SBA operates conform to the federal rules recognizing REITs. Certain subsidiaries have made an election with the Company to be treated as TRSs in conjunction with the Company's REIT election; the TRS elections permit SBA to engage in certain business activities in which the REIT may not engage directly. A TRS is subject to federal and state income taxes on the income from these activities. A provision for taxes of the TRSs and of foreign branches of the REIT are included in its consolidated financial statements.

Income (loss) before provision for income taxes by geographic area is as follows:



		For the year ended December 31,
	2016		2015		2014

	(in thousands)

Domestic	$	(28,671)	$	(22,698)	$	(16,623)
Foreign		115,974		(143,897)		963
Total	$	87,303	$	(166,595)	$	(15,660)

The provision for income taxes consists of the following components:



		For the year ended December 31,
	2016		2015		2014

	(in thousands)
Current provision:
State	$	1,535	$	2,752	$	1,099
Foreign		8,121		6,314		7,006
Total current		9,656		9,066		8,105

Deferred provision (benefit) for taxes:
Federal		170,177		(3,023)		1,458
State		22,992		(3,106)		(887)
Foreign		30,425		(40,636)		(472)
Change in valuation allowance		(222,185)		46,760		431
Total deferred		1,409		(5)		530
Total provision for income taxes	$	11,065	$	9,061	$	8,635

A reconciliation of the provision for income taxes at the statutory U.S. Federal tax rate (35%) and the effective income tax rate is as follows:



	For the year ended December 31,
	2016		2015		2014

	(in thousands)
Statutory federal expense (benefit)	$	30,555	$	(58,307)	$	(5,481)
Foreign tax rate differential		1,083		3,534		3,844
State and local tax expense (benefit)		3,941		(230)		138
Effect of REIT election		205,317		—		—
Permanent differences		(3,577)		4,892		5,644
Foreign dividend income		—		—		3,700
Foreign tax rate change		—		—		1,374
Foreign exchange rate changes		(5,822)		9,212		(799)
Other		1,753		3,200		(216)
Valuation allowance		(222,185)		46,760		431
Provision for income taxes	$	11,065	$	9,061	$	8,635

The components of the net deferred income tax asset (liability) accounts are as follows:



	As of December 31,
	2016			2015

	(in thousands)
Noncurrent deferred tax assets:
Net operating losses	$	50,143	$	369,924
Property, equipment, and intangible basis differences		2,583		28,226
Accrued liabilities		12,264		45,885
Non-cash compensation		19,908		14,913
Deferred revenue		3,904		43,608
Allowance for doubtful accounts		6,187		647
Currency translation		33,088		57,015
Other		1,032		4,357
Valuation allowance		(70,233)		(292,871)
Total noncurrent deferred tax assets, net (1)		58,876		271,704

Noncurrent deferred tax liabilities:
Property, equipment, and intangible basis differences		(65,459)		(242,763)
Straight-line rents		(18,081)		(28,058)
Deferred lease costs		(1,087)		(11,611)
Other		(922)		(14,448)
Total noncurrent deferred tax liabilities, net (1)	$	(26,673)	$	(25,176)

(1)Of these amounts, $774 and $27,447 are included in Other assets and Other long-term liabilities, respectively on the accompanying Consolidated Balance Sheets as of December 31, 2016. As of December 31, 2015, $619 and $25,795 are included in Other assets and Other long-term liabilities on the accompanying Consolidated Balance Sheet.

A deferred tax asset is reduced by a valuation allowance if based on the weight of all available evidence, it is more likely than not (a likelihood of more than 50%) that the value of such assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized. The determination of whether a deferred tax asset is realizable is based on weighting all available evidence, including both positive and negative evidence. The realization of deferred tax assets, including carryforwards and deductible temporary differences, depends upon the existence of sufficient taxable income of the same character during the carryback or carryforward period. All sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, taxable income in carryback years and tax-planning strategies, should be considered.

The Company has recorded a valuation allowance for the majority of its deferred tax assets as management believes that it is not “more-likely-than-not” that the Company will generate sufficient taxable income in future periods to recognize the assets. Valuation allowances of $70.2 million and $292.9 million were being carried to offset net deferred income tax assets as of December 31, 2016 and 2015, respectively. The net change in the valuation allowance for the years ended December 31, 2016 and 2015 was $(222.6) million and $25.6 million, respectively. As a result of the REIT conversion, the Company has reversed net deferred tax assets and the related valuation allowance of the subsidiaries included in the REIT in the amount of $205.3 million.

The Company has available at December 31, 2016, a federal NOL carry-forward of approximately $1.2 billion. These NOL carry-forwards will expire between 2021 and 2036. As of December 31, 2016, $1.1 billion of the federal NOLs are attributes of the REIT. The Company may use these NOLs to offset its REIT taxable income, and thus any required distributions to shareholders may be reduced or eliminated until such time as the NOLs have been fully utilized. The Internal Revenue Code places limitations upon the future availability of NOLs based upon changes in the equity of the Company. If these occur, the ability of the Company to offset future income with existing NOLs may be limited. In addition, the Company has available at December 31, 2016, a foreign NOL carry-forward of $66.6 million and a net state operating tax loss carry-forward of approximately $502.0 million. These net operating tax loss carry-forwards begin to expire in 2017.

The U.S. tax losses generated in tax years 1999 through 2013 remain subject to adjustment, and tax years 2013 through 2016 are open to examination by the major jurisdictions in which the Company operates.

The Company does not expect to remit earnings from its foreign subsidiaries. Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $92.8 million at December 31, 2016. $60.3 million of these earnings are considered to be permanently reinvested; accordingly, no U.S. Federal and state income taxes have been provided thereon. It is not practicable to compute the potential deferred tax liability associated with these undistributed foreign earnings. Upon distribution of those earnings in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries.

As discussed in Note 2, the Company adopted ASU 2016-09 during 2016. Prior to 2016, no tax benefit was recognized in equity related to equity-based compensation as our excess tax benefits did not reduce taxes payable. During 2016, we recognized $27.327.3 million of excess tax deductions in our income tax provision that are ultimately offset with a valuation allowance at the TRS for no net benefit.