Income Taxes

Income before income tax provision consists of the following (in thousands):



	Year Ended December 31,
	2014		2013		2012
Domestic	$	64,238	$	64,281	$	61,983
International	44		14		86
Total income before income tax provision	$	64,282	$	64,295	$	62,069

The components of the provision for income taxes are as follows (in thousands):



	Year Ended December 31,
	2014			2013			2012
Current:
Federal	$	(26,517	)	$	(17,145	)	$	(17,525	)
State	(3,031		)	(1,188		)	(643		)
Foreign	(9,611		)	(8,220		)	(3,737		)
Total current provision for income taxes	(39,159		)	(26,553		)	(21,905		)
Deferred:
Federal	13,668			2,920			(450		)
State	550			121			(757		)
Total deferred provision for income taxes	14,218			3,041			(1,207		)
Total provision for income taxes	$	(24,941	)	$	(23,512	)	$	(23,112	)

Net deferred tax assets (liabilities) consist of the following (in thousands):



	December 31,
	2014			2013
Deferred tax assets:
Deferred revenue	$	2,779		$	1,850
Reserves and other	2,319			2,073
Stock-based compensation	5,963			5,200
Total deferred tax assets	11,061			9,123
Deferred tax liabilities:
Depreciation and amortization	(6,568		)	(16,960		)
Net deferred tax assets (liabilities)	$	4,493		$	(7,837	)

The following is a reconciliation of the statutory federal income tax to the Company’s effective tax (in thousands):



	Year Ended December 31,
	2014			2013			2012
Tax at statutory federal rate	$	(22,498	)	$	(22,503	)	$	(21,721	)
State tax – net of federal benefit	(1,678		)	(655		)	(928		)
Permanent differences	(879		)	(569		)	(644		)
Foreign tax	(9,576		)	(8,214		)	(3,737		)
Foreign tax credits	9,576			8,216			3,652
Foreign income not taxed at federal rate	(3		)	1			30
Other	117			212			236
Total provision for income taxes	$	(24,941	)	$	(23,512	)	$	(23,112	)

In assessing the realization of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of deferred assets will not be realized. The ultimate realization of the deferred tax asset is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the available objective evidence as of December 31, 2014, management believes it is more-likely-than-not that the U.S. net deferred tax asset will be fully realized. Accordingly, management has not applied a valuation allowance against its net deferred tax assets.

As of December 31, 2013, the Company had state net operating loss carryforwards of $2.0 million available to reduce future taxable income which were fully utilized during 2014.

Internal Revenue Code Section 382 places a limitation (the Section 382 Limitation) on the amount of taxable income that can be offset by net operating loss carryforwards after a change in control (generally greater than 50% change in ownership) of a loss corporation. California has similar rules. Generally, after a change in control, a loss corporation cannot deduct operating loss carryforwards in excess of the Section 382 Limitation. Management has considered the impact of such limitation in determining the utilization of its operating loss carryforwards against taxable income in future periods.

Deferred tax liabilities have not been recognized for undistributed earnings for foreign subsidiaries because it is management’s intention to indefinitely reinvest such undistributed earnings outside the U.S. Generally, such earnings are subject to potential foreign withholding tax and the U.S. tax upon remittance of dividends and under certain other circumstances. The Company believes that the the potential liability would be immaterial.

Uncertain Tax Positions

As of December 31, 2014, the Company’s total amount of unrecognized tax benefits was $3.7 million, all of which would impact the Company’s effective tax rate, if recognized.

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



	2014			2013			2012
Balance as of January 1,	$	2,036		$	1,136		$	369
Gross increase related to current period tax positions	1,672			1,043			767
Gross decrease related to prior period tax positions	(1		)	(143		)	—
Balance as of December 31,	$	3,707		$	2,036		$	1,136

The Company does not believe it is reasonably possible that its unrecognized tax benefits will significantly change within the next twelve months.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. During the years ended December 31, 2014, 2013 and 2012, the Company recognized $0.7 million, $0.1 million, and $0.1 million, respectively, of interest and penalties associated with unrecognized tax benefits.

The Company’s 2010 tax year is currently under examination by the State of California Franchise Tax Board. The Company does not expect a material impact on its consolidated financial statements as a result of this examination. The 2011 through 2013 tax periods remain open to examination by the Internal Revenue Service and the 2010 through 2013 tax periods remain open to examination by most state tax authorities. For the Company's foreign jurisdictions, the 2009 through 2013 tax years remain open to examination by their respective tax authorities.