Income Taxes

Income from continuing operations before tax and equity investment for the three years ended December 31 is as follows:



	Year Ended December 31,
(in thousands)	2016		2015		2014
Domestic	$	8,045	$	40,258	$	39,154
Foreign	330		1,262		148
Total income from continuing operations before tax and equity investment	$	8,375	$	41,520	$	39,302

The provision for (benefit from) income taxes for the three years ended December 31 is as follows:



		Year Ended December 31,
(in thousands)		2016			2015			2014
Current
	Federal	$	1,096		$	497		$	(413	)
	State	2,776			2,179			2,164
	Foreign	1,761			711			877
	Total income taxes, current	5,633			3,387			2,628
Deferred
	Federal	8,247			12,993			14,110
	State	488			1,729			495
	Foreign	(475		)	(112		)	(225		)
	Total income taxes, deferred	8,260			14,610			14,380
Total income tax provision		$	13,893		$	17,997		$	17,008

Deferred income taxes result from temporary differences in the financial basis and tax basis of assets and liabilities. The amounts shown on the following table represent the tax effect of temporary differences between the Company's consolidated tax return basis of assets and liabilities and the corresponding basis for financial reporting, as well as tax credit and net operating loss carryforwards.



(in thousands)	December 31,			December 31,
Deferred Income Tax Sources	2016			2015
Inventories	$	4,140		$	330
Environmental costs	3,042			1,013
Accrued liabilities	7,012			4,927
Post-retirement and post-employment employee benefits	1,510			896
Net operating loss carryforwards	18,428			29,544
Pension liabilities	96,982			98,556
Impairments of long-lived assets	3,245			—
Minimum tax credit carryforwards	3,146			7,356
R&D state credit carryforwards	1,172			—
Miscellaneous other	9,137			7,009
Deferred income tax assets before valuation allowance	147,814			149,631
Valuation allowance	(5,815		)	(4,267		)
Deferred income tax assets	141,999			145,364
Property, plant and equipment	(14,717		)	(15,112		)
Intangible assets	(31,822		)	(9,847		)
Undistributed foreign earnings	(181		)	(256		)
Other items, net	(373		)	—
Deferred income tax liabilities	(47,093		)	(25,215		)
Net deferred income tax assets	$	94,906		$	120,149

Foreign:
Trade receivables	$	18		$	—
Inventories	35			—
Other items, net	25			—
Net operating loss carryforwards	2,591			1,340
Valuation allowance	(2,487		)	(1,340		)
Foreign deferred income tax assets	182			—
Foreign deferred tax liabilities. principally related to long-lived assets	(3,008		)	(402		)
Net foreign deferred income tax liabilities	$	(2,826	)	$	(402	)

The Company's 2016 tax provision reflects the utilization of approximately $26.0 million of U.S. federal NOLs. The Company's remaining U.S. federal NOLs as of December 31, 2016 total $37.8 million and expire between 2020 and 2031. Such amounts were acquired by the Company as a result of the JPS acquisition in 2015. The utilization of the JPS NOLs is subject to certain annual limitations under the ownership change rules of Section 382 of the Internal Revenue Code. Included in deferred income tax assets as of December 31, 2016 is a $13.2 million tax effect of the Company's U.S. federal NOLs, as well as certain state NOLs.

The Company provides for income taxes on the undistributed earnings of non-U.S. corporate subsidiaries, except to the extent that such earnings are permanently invested outside the U.S. As of December 31, 2016, $7.6 million of accumulated undistributed earnings of non-U.S. corporate subsidiaries were permanently invested. At existing U.S. and state statutory income tax rates, additional taxes of approximately $2.7 million would need to be provided if such earnings were remitted.

The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as follows:



	Year Ended December 31,
(in thousands)	2016			2015			2014
Income from continuing operations before tax and equity investment	$	8,375		$	41,520		$	39,302
Tax provision at statutory rate	$	2,931		$	14,532		$	13,755
Increase (decrease) in tax due to:
State income taxes, net of federal effect	2,607			3,134			1,991
Net increase in valuation allowance	883			366			487
Decrease in liability for uncertain tax positions	(319		)	(381		)	(70		)
Foreign tax differential	277			(209		)	101
Non-deductible goodwill impairment charges	6,371			—			—
Dividend income and gross ups	693			—			—
Foreign tax credits	(964		)	—			—
Other items, net	1,414			555			744
Tax provision	$	13,893		$	17,997		$	17,008

U.S. GAAP provides that the tax effects from an uncertain tax position can be recognized in the financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position. At December 31, 2016 and 2015, the Company had approximately $2.6 million and $1.8 million of unrecognized tax benefits recorded, respectively, all of which, net of federal benefit for state taxes, would affect the Company's effective tax rate if recognized. Of this amount, the Company has offset approximately $0.3 million and $0.0 million against certain related deferred tax assets in the same jurisdiction as of December 31, 2016 and December 31, 2015, respectively. The changes in the amount of unrecognized tax benefits during 2016 and 2015 were as follows:



	Year Ended December 31,
(in thousands)	2016			2015
Beginning balance	$	1,786		$	1,274
Additions for tax positions related to current year	175			787
Additions for tax positions acquired	1,114			—
Additions due to interest accrued	148			85
Tax positions of prior years:
Payments	—			(57		)
Due to lapsed statutes of limitations	(642		)	(303		)
Ending balance	$	2,581		$	1,786

The Company recognizes interest and penalties related to uncertain tax positions in its income tax provision. At December 31, 2016 and 2015, approximately $0.3 million and $0.1 million of interest related to uncertain tax positions was accrued. No penalties were accrued. It is reasonably possible that the total amount of unrecognized tax benefits will decrease by as much as $0.6 million during the next year as a result of the lapse of the applicable statutes of limitations in certain taxing jurisdictions.

The Company is generally no longer subject to federal, state or local income tax examinations by tax authorities for any year prior to 2013, except as noted below. However, NOLs generated in prior years are subject to examination and potential adjustment by the Internal Revenue Service ("IRS") upon their utilization in future years' tax returns.

The Company is not currently under examination by the IRS, but has received a notice of examination for tax year 2014, which has not commenced.

The Company is currently under examination by the State of New York for 2012-2013, which is on-going. The Company has not been notified of any material adjustments to be made as a result of this examination. The Company underwent an examination by the State of New York for 2009 to 2011, which resulted in an assessment of $0.1 million paid in January 2016.