Income Taxes

The provision (benefit) for income taxes for the years ended December 31, 2018, 2017 and 2016, consisted of the following (in thousands):



	Years Ended December 31,
	2018			2017		2016
Current:
Federal	$	99,830		$	133,097	$	156,937
State	38,356			24,944		34,927
Foreign	35,007			27,079		20,725
Deferred:
Federal and state	(15,849		)	41,717		(3,785		)
Foreign	(30		)	95		1,917
	$	157,314		$	226,932	$	210,721

Income before the provision for income taxes for the years ended December 31, 2018, 2017 and 2016, consisted of the following (in thousands):



	Years Ended December 31,
	2018		2017		2016
Domestic	$	485,489	$	445,418	$	494,890
Foreign	106,113		72,098		59,220
	$	591,602	$	517,516	$	554,110

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



	Years Ended December 31,
	2018		2017		2016
Federal U.S. income tax rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	4.7		3.7		4.2
Permanent book/tax differences	0.6		0.4		0.5
Non-U.S. income taxed at different rates, net of foreign tax credits	2.0		—		(0.6	)
Federal tax credits	(1.7	)	(1.3	)	(0.8	)
Tax impact of uncertain tax positions	0.8		0.2		—
Valuation allowance release, net	—		—		(0.1	)
Tax effects of TCJA	0.4		6.5		—
Other, net	(1.2	)	(0.6	)	(0.2	)
Effective tax rate	26.6	%	43.9	%	38.0	%

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



	Years Ended December 31,
	2018			2017			2016
Accrued expenses, deducted for tax when paid	$	(21,884	)	$	15,213		$	(6,889	)
Capitalized costs for books, deducted for tax	(4,832		)	(5,790		)	5,901
Depreciation	10,071			(4,079		)	(2,405		)
Tax effects of TCJA	—			34,633			—
Other, net	766			1,835			1,525
	$	(15,879	)	$	41,812		$	(1,868	)

The components of the deferred income tax amounts at December 31, 2018 and 2017, were as follows (in thousands):



	December 31,
	2018			2017
Deferred Income Tax Assets
Deferred compensation and other benefit obligations	$	87,513		$	68,101
Credits and net operating loss carryforwards	31,169			30,087
Stock-based compensation	9,535			8,614
Provision for bad debts	7,891			6,794
Workers’ compensation	3,580			3,127
Other	14,959			13,343
Total deferred income tax assets	154,647			130,066
Deferred Income Tax Liabilities
Amortization of intangible assets	(21,210		)	(20,220		)
Property and equipment basis differences	(9,761		)	(4,421		)
Other	(10,319		)	(10,847		)
Total deferred income tax liabilities	(41,290		)	(35,488		)
Valuation allowance	(23,072		)	(20,178		)
Total deferred income tax assets, net	$	90,285		$	74,400

Credits and net operating loss carryforwards primarily include net operating losses in foreign countries of $27.7 million that expire in 2019 and later; and California enterprise zone tax credits of $2.9 million that expire in 2023. Of the $2.9 million of California enterprise zone tax credits, the Company expects that it will utilize $1.2 million of these credits prior to expiration. Valuation allowances of $21.4 million have been maintained against net operating loss carryforwards and other deferred items in foreign countries. In addition, a valuation allowance of $1.7 million has been maintained against California enterprise zone tax credits.

As of December 31, 2018, the Company’s consolidated financial statements provide for any related U.S. tax liability on earnings of foreign subsidiaries that may be repatriated, aside from undistributed earnings of certain of the Company’s foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the United States.

The following table reconciles the total amounts of gross unrecognized tax benefits from January 1, 2016 to December 31, 2018 (in thousands):



	December 31,
	2018			2017			2016
Balance at beginning of period	$	2,886		$	731		$	814
Gross increases—tax positions in prior years	3,259			1,503			92
Gross decreases—tax positions in prior years	(8		)	(257		)	—
Gross increases—tax positions in current year	2,284			956			114
Settlements	—			(40		)	—
Lapse of statute of limitations	(3		)	(7		)	(289		)
Balance at end of period	$	8,418		$	2,886		$	731

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $8.3 million, $2.8 million and $0.5 million for 2018, 2017 and 2016, 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, 2018 is $0.3 million, including a $0.2 million increase recorded in income tax expense during the year. The total amount of interest and penalties accrued as of December 31, 2017 was $0.1 million. The total amount of interest and penalties accrued as of December 31, 2016, was $0.1 million, including a $0.1 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, $0.1 million of the unrecognized gross tax benefit has been classified as a current liability as of December 31, 2018. 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 2015 and subsequent years. For major U.S. states, with few exceptions, the Company remains subject to examination for 2014 and subsequent years. Generally, for the foreign countries, the Company remains subject to examination for 2011 and subsequent years.