8. INCOME TAXES

The following table presents the U.S. and non‑U.S. components of income (loss) before income tax expense:


	For the Year Ended December 31,
	2016		2015		2014
U.S.	$	172,401	$	140,477	$	69,734
Non‑U.S.		(5,727)		3,587		(23,439)
Income (loss) before income taxes	$	166,674	$	144,064	$	46,295

The current and deferred components of the income tax provision for the years ended December 31, 2016, 2015, and 2014 are as follows:


	For the Year Ended December 31,
	2016		2015		2014
Current income taxes:
Federal	$	22,178	$	14,483	$	8,242
State and Local		5,361		4,254		3,759
Foreign		(1,716)		4,314		2,492
	$	25,823	$	23,051	$	14,493
Deferred income taxes:
Federal	$	(848)	$	774	$	(688)
State and Local		(207)		(29)		164
Foreign		41		51		(229)
Total	$	24,809	$	23,847	$	13,740

The total provision for income taxes differs from the amount which would be computed by applying the appropriate statutory rate to income before income taxes as follows:


	For the Year Ended December 31,
	2016		2015		2014
Reconciliation of federal statutory tax rates
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) due to state and local taxes	2.3	%	2.2	%	7.5	%
Rate benefit as a U.S. limited partnership/flow through	-21.8	%	-22.1	%	-29.9	%
Non‑deductible expenses*	0.2	%	0.3	%	12.2	%
Foreign taxes	-0.9	%	1.8	%	4.9	%
Other	0.1	%	-0.6	%	—
Effective income tax rate	14.9	%	16.6	%	29.7	%

*Primarily related to non‑deductible equity compensation associated with the vesting of Group LP units granted prior to the IPO.

Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount in the Company’s consolidated statements of financial condition. These temporary differences result in taxable or deductible amounts in future years. The significant components of deferred tax assets and liabilities included on the Company’s consolidated statements of financial condition are as follows:


	For the Year Ended December 31,
	2016		2015
Net operating loss	$	5,988	$	9,043
Step-up in tax basis in Group LP assets		143,630		149,605
Deferred Compensation		21,132		10,064
Accrued expenses and other		3,995		5,965
		174,745		174,677
Valuation allowance on NOL and other		(6,954)		(9,172)
Net deferred tax asset	$	167,791	$	165,505

The Company recorded an increase in the net deferred tax asset of $2,286 for the year ended December 31, 2016, which was primarily attributable to an increase in deferred compensation. The changes in deferred tax assets also reflects the net effect of an increase in the step‑up in tax basis in Group LP assets resulting from the exchange of Class A partnership units in Group LP for Class A common stock coupled with the depreciation and amortization of such assets during the year. Approximately $518 of the deferred tax asset related to the step‑up in tax basis is attributable to exchanges executed in 2016 by certain partners of Group LP who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $440) of the tax benefits associated with this deferred tax asset are payable to such exchanging partners over 15 years following these transactions and is recorded as amount due pursuant to tax receivable agreement in the consolidated statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid‑in‑capital.

As of December 31, 2016, the Company had accumulated net foreign operating loss carryforwards related to our international operations of approximately $22,163 for which we have recorded a deferred tax asset of $5,988. Approximately $20,129 of the operating losses (or $5,321 of the deferred tax asset) has an indefinite life and $2,034 of the operating losses (or $667 of the deferred tax asset) will expire on dates between 2019 and 2023. At December 31, 2016, the Company’s management concluded that a valuation allowance should be established with regard to the tax benefits associated with foreign net operating losses, as it is more likely than not that these losses will not be fully utilized in future years.

U.S. income and foreign withholding taxes are not provided for on the undistributed earnings of foreign subsidiaries that are essentially permanent in nature. There were no significant untaxed foreign earnings at December 31, 2016, 2015 and 2014.

Prior to the Company’s reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax (“UBT”) and certain other foreign, state and local taxes. The Company’s operations are comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of their interest holders, which are primarily made up of individual partners and members and have historically not been reflected in the consolidated statements of financial condition. In connection with the Company’s reorganization and IPO, the Company became subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from Group LP.

The Company is subject to taxation in certain U.S., state, local, and foreign jurisdictions. As of December 31, 2016, the Company’s tax years for 2015, 2014, and 2013 are generally subject to examination by the tax authorities. As of December 31, 2016, the Company does not expect any material changes in its tax provision related to any outstanding current examinations. Developments with respect to such examinations are monitored on an ongoing basis and adjustments to tax liabilities are made as appropriate.

The Company has no unrecognized tax benefits for the periods ended December 31, 2016, 2015 and 2014.