Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2016, 2015 and 2014, consisted of the following (in thousands):



	Years Ended December 31,
	2016			2015			2014
Current:
Federal	$	156,937		$	181,640		$	146,633
State	34,927			36,281			33,054
Foreign	20,725			13,892			15,377
Deferred:
Federal and state	(3,785		)	(8,398		)	(4,626		)
Foreign	1,917			(181		)	983
	$	210,721		$	223,234		$	191,421

Income before the provision for income taxes for the years ended December 31, 2016, 2015 and 2014, consisted of the following (in thousands):



	Years Ended December 31,
	2016		2015		2014
Domestic	$	494,890	$	528,916	$	446,886
Foreign	59,220		52,114		50,463
	$	554,110	$	581,030	$	497,349

The income taxes shown above varied from the statutory federal income tax rates for these periods as follows:



	Years Ended December 31,
	2016		2015		2014
Federal U.S. income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	4.2		4.2		4.2
Non-deductible expenses	0.5		0.5		0.6
Non-U.S. income taxed at different rates, net of foreign tax credits	(0.6	)	0.1		(0.2	)
Federal tax credits	(0.8	)	(0.6	)	(0.6	)
Tax impact of uncertain tax positions	—		(0.2	)	(0.1	)
Valuation allowance release, net	(0.1	)	(0.5	)	(0.3	)
Other, net	(0.2	)	(0.1	)	(0.1	)
Effective tax rate	38.0	%	38.4	%	38.5	%

The deferred portion of the tax provision (benefit) consisted of the following (in thousands):



	Years Ended December 31,
	2016			2015			2014
Amortization of franchise rights	$	500		$	514		$	514
Amortization of other intangibles	1,221			1,590			1,241
Accrued expenses, deducted for tax when paid	(6,889		)	(17,664		)	(14,221		)
Capitalized costs for books, deducted for tax	5,901			5,315			8,809
Depreciation	(2,405		)	(5,932		)	(4,147		)
Federal impact of unrecognized tax benefits	75			1,058			44
Foreign tax credit carryforwards	—			3,636			(186		)
Other, net	(271		)	2,904			4,303
	$	(1,868	)	$	(8,579	)	$	(3,643	)

The components of the deferred income tax amounts at December 31, 2016 and 2015, were as follows (in thousands):



	December 31,
	2016			2015
Deferred Income Tax Assets
Provision for bad debts	$	10,510		$	11,092
Deferred compensation and other benefit obligations	112,811			96,948
Workers’ compensation	5,634			8,206
Stock-based compensation	16,772			15,814
Credits and net operating loss carryforwards	30,534			35,499
Other	18,116			23,885
Total deferred income tax assets	194,377			191,444
Deferred Income Tax Liabilities
Amortization of intangible assets	(28,681		)	(26,960		)
Property and equipment basis differences	(16,640		)	(11,890		)
Other	(11,658		)	(9,720		)
Total deferred income tax liabilities	(56,979		)	(48,570		)
Valuation allowance	(18,907		)	(26,329		)
Total deferred income tax assets, net	$	118,491		$	116,545

Credits and net operating loss carryforwards primarily include net operating losses in foreign countries of $24.5 million that expire in 2017 and later; and California enterprise zone tax credits of $3.4 million that expire in 2023. Of the $3.4 million of California enterprise zone tax credits, the Company expects that it will utilize $2.4 million of these credits prior to expiration. Valuation allowances of $17.9 million have been established for net operating losses carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $1.0 million has been established for California enterprise zone tax credits.

The Company has not provided deferred income taxes or foreign withholding taxes on $16.9 million and $5.7 million of undistributed earnings of its non-U.S. subsidiaries as of December 31, 2016 and 2015, respectively, since the Company intends to reinvest these earnings indefinitely. The U.S. tax impact upon repatriation, net of foreign tax credits, would be $2.1 million and zero for the years ended December 31, 2016 and 2015, respectively.

FASB authoritative guidance prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The literature also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2014 to December 31, 2016 (in thousands):



	December 31,
	2016			2015			2014
Balance at beginning of period	$	814		$	4,573		$	6,110
Gross increases—tax positions in prior years	92			—			1
Gross decreases—tax positions in prior years	—			(1,807		)	(333		)
Gross increases—tax positions in current year	114			120			35
Settlements	—			(520		)	—
Lapse of statute of limitations	(289		)	(1,552		)	(1,240		)
Balance at end of period	$	731		$	814		$	4,573

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $0.5 million, $0.5 million and $0.9 million for 2016, 2015 and 2014, respectively.

The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. The total amount of interest and penalties accrued as of December 31, 2016, is $0.1 million, including a $0.1 million reduction recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2015 is $0.2 million, including a $2.3 million reduction recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2014, was $2.5 million, including a $0.3 million reduction recorded in income tax expense during the year.

The Company believes it is reasonably possible that the settlement of certain tax uncertainties could occur within the next twelve months; accordingly, $0.3 million of the unrecognized gross tax benefit has been classified as a current liability as of December 31, 2016. This amount primarily represents unrecognized tax benefits composed of items related to assessed state income tax audits and negotiations.

The Company’s major income tax jurisdictions are the United States, Australia, Belgium, Canada, France, Germany and the United Kingdom. For U.S. federal income tax, the Company remains subject to examination for 2013 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2012 and subsequent years. Generally, for the foreign countries, the Company remains subject to examination for 2009 and subsequent years.