(9)Income Taxes

For the years ended December 31, 2014, 2013 and 2012, net income before income taxes and non-controlling interest consisted of the following (in thousands):



	Year Ended December 31,
	2014		2013		2012
U.S. operations	$	7,853	$	9,225	$	15,595
Foreign operations		59,723		62,352		58,504
	$	67,576	$	71,577	$	74,099

Income tax expense (benefit) attributable to income from operations consisted of (in thousands):



	Year Ended December 31,
	2014		2013		2012
Current
Federal	$	3,005	$	2,032	$	1,557
State		62		37		38
Foreign		1,954		1,783		2,209
		5,021		3,852		3,804
Deferred
Federal		930		2,777		5,297
State		247		(469)		(257)
Foreign		993		897		974
		2,170		3,205		6,014
Income tax expense	$	7,191	$	7,057	$	9,818

The reconciliations between the Company’s income tax expense and the amounts computed by applying the U.S. federal income tax rate of 35.0% for the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):



	Year Ended December 31,
	2014		2013		2012
Computed expected tax expense	$	23,651	$	25,052	$	25,935
Increase (decrease) in income taxes resulting from:
Foreign tax differential		(17,955)		(19,046)		(17,294)
State income tax expense, net of federal income tax benefit		55		(514)		(66)
Subpart F income		1,106		1,255		1,404
Increase (decrease) in uncertain tax positions		38		124		(78)
Non-deductible stock-based compensation		112		92		86
Change in valuation allowance		167		-		-
Other		17		94		(169)
	$	7,191	$	7,057	$	9,818

As of December 31, 2014, the Company had $72.6 million and $7.7 million of net operating loss (NOL) carry forwards available to offset future foreign and state taxable income, respectively. The NOL carry forwards will begin to expire in 2019 and 2029 for foreign and state income tax purposes, respectively.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2013 are presented below (in thousands):



	Year Ended December 31,
	2014		2013
Deferred tax assets:
Accounts receivable (owned fleet)	$	63	$	44
Accrued expenses and other current liabilities		114		105
Unearned revenue		209		190
Stock-based compensation		2,174		1,777
Other		36		13
Net operating loss carry forwards		2,602		1,488
Gross deferred tax assets		5,198		3,617
Valuation allowance		(167)		-
Net deferred tax assets		5,031		3,617

Deferred tax liabilities:
Intangible assets		68		112
Depreciation and amortization		40,015		37,131
Foreign deferred tax liabilities		2,953		3,325
Deferred subpart F income		5,193		4,087
Unrealized gain		39		29
Gross deferred tax liabilities		48,268		44,684
Net deferred tax liability	$	43,237	$	41,067

The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company’s management considers the projected future taxable income for making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company’s management believes it is more likely than not the Company will realize the benefits of the deductible differences noted above.

Deferred income taxes have not been provided on the undistributed earnings of foreign subsidiaries. As of December 31, 2014, the amount of such earnings totaled approximately $247.4 million. These earnings have been permanently reinvested and the Company does not plan to initiate any action that would precipitate the payment of income taxes thereon. The amount of income taxes that would have resulted had such earnings been repatriated is not practically determinable.

The Company is required to recognize in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company has elected to record penalties and interest associated with uncertain tax position within income tax expense. The Company accrues for unrecognized tax benefits based upon its best estimate of the additional taxes to be paid. These estimates are updated over time as more definitive information becomes available from taxing authorities, completion of tax examinations, expiration of statute of limitations, or upon occurrence of other events.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands):



Balance at January 1, 2013	$	182
Increases related to prior year tax positions		116
Increases related to current year tax positions		19
Decreases related to lapsing of statute		(9)
Decreases related to settlement		(168)
Balance at December 31, 2013		140
Increases related to prior year tax positions		13
Increases related to current year tax positions		35
Balance at December 31, 2014	$	188

The unrecognized tax benefits of approximately $0.2 million at December 31, 2014, if recognized, would reduce the Company’s effective tax rate. The Company accrued potential interest and penalties of less than $0.1 million related to unrecognized tax benefits for each of the years ended December 31, 2014 and 2013. The Company does not believe the total amount of unrecognized tax benefit as of December 31, 2014 will increase or decrease significantly in the next twelve months.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. With few exceptions, as of December 31, 2014, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2010. In June 2013, the Company received notification from the IRS that they had completed their examination for both 2008 and 2009, making changes to taxable income for those years. The changes did not materially alter the Company’s income tax for those years.