11. Income Taxes

“Income before provision for income taxes” as shown in the accompanying Consolidated Statements of Income is comprised of the following (in thousands):


	Year Ended December 31,
	2016		2015		2014
Domestic	$	51,778	$	52,127	$	40,103
Foreign		11,305		11,253		13,824
Total	$	63,083	$	63,380	$	53,927

Components of the “Provision for income taxes” in the accompanying Consolidated Statements of Income consist of the following (in thousands):


	Year Ended December 31,
	2016		2015		2014
Current
Federal	$	8,002	$	5,451	$	4,304
Foreign		2,855		3,019		3,383
State and local		943		1,029		396
Total current expense		11,800		9,499		8,083
Deferred expense
Federal		3,222		2,333		1,741
Foreign		13		25		(5)
State and local		238		173		129
Total deferred expense		3,473		2,531		1,865
Provision for income taxes	$	15,273	$	12,030	$	9,948

The provision for income taxes is comprised of a provision for income taxes attributable to RE/MAX Holdings and to entities other than RE/MAX Holdings. The provision for income taxes attributable to RE/MAX Holdings includes all U.S. federal and state income taxes on RE/MAX Holdings’ proportionate share of RMCO’s net income. The provision for income taxes attributable to entities other than RE/MAX Holdings represents taxes imposed directly on RE/MAX, LLC that are allocated to the non-controlling interest.

A reconciliation of the U.S. statutory income tax rate to the Company’s effective tax rate is as follows:


	Year Ended December 31,
	2016		2015		2014
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Increase due to state and local taxes, net of federal benefit	2.6		2.6		2.6
Effect of permanent differences	(0.4)		1.0		0.6
Income attributable to non-controlling interests	(14.1)		(19.7)		(18.7)
Other	1.1		0.1		(1.1)
Effective tax rate	24.2	%	19.0	%	18.4	%

The Company’s effective tax rate includes a rate benefit attributable to the fact that the Company’s subsidiaries operate as a series of limited liability companies which are not themselves subject to federal income tax. Accordingly, the portion of the Company’s subsidiaries earnings attributable to the non-controlling interest are subject to tax when reported as a component of the non-controlling interests’ taxable income and are excluded from the Provision for Income Taxes (See Note 3: Non-controlling Interest).

Income taxes payable were $379,000 and $451,000 at December 31, 2016 and 2015, respectively.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the accompanying Consolidated Balance Sheets.

These temporary differences result in taxable or deductible amounts in future years. Details of the Company’s deferred tax assets and liabilities are summarized as follows (in thousands):


	As of December 31,
	2016		2015
Deferred tax assets
Goodwill, other intangibles and other assets and liabilities	$	90,686	$	95,275
Imputed interest deduction pursuant to tax receivable agreements		8,483		8,476
Rent liabilities		2,037		1,981
Compensation and benefits		1,606		2,056
Accrued liabilities		15		713
Allowance for doubtful accounts		979		768
Contingent acquisition liability		1,405		—
Other		840		442
Total deferred tax assets		106,051		109,711
Deferred tax liabilities
Property and equipment and other long lived assets		(414)		(466)
Total deferred tax liabilities		(414)		(466)
Total deferred tax assets and liabilities	$	105,637	$	109,245

Net deferred tax assets are also recorded related to differences between the financial reporting basis and the tax basis of RE/MAX Holdings’ proportionate share of the net assets of RMCO. Based on the Company’s historical taxable income and its expected future earnings, management evaluates the uncertainty associated with booking tax benefits and determined that the deferred tax assets are more likely than not to be realized, including evaluation of deferred tax liabilities and the expectation of future taxable income.

The Company does not believe it has any significant uncertain tax positions. Accordingly, the Company did not record any adjustments or recognize interest expense for uncertain tax positions for the years ended December 31, 2016, 2015 and 2014. In the future, if uncertain tax positions arise, interest and penalties will be accrued and included in the “Provision for income taxes” in the accompanying Consolidated Statements of Income.

The Company and its subsidiaries file, or will file, income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. RE/MAX Holdings will file its 2016 income tax return by September 15, 2017. RE/MAX Holdings filed its 2015 tax return on September 14, 2016, its 2014 tax return on September 9, 2015 and its initial income tax return for the period from October 7, 2013 through December 31, 2013 on September 12, 2014. RMCO is not subject to domestic federal income taxes as it is a flow-through entity, however, RMCO is still required to file an annual U.S. Return of Partnership Income. The Company was notified on January 6, 2016 that RMCO’s 2013 U.S. Return of Partnership Income was selected for examination by the Internal Revenue Service. The audit commenced in April 2016 and concluded in June 2016 and no changes were made as a result of the audit. With respect to state and local jurisdictions and countries outside of the U.S., the Company and its subsidiaries are typically subject to examination for three to four years after the income tax returns have been filed.