15. Income Taxes

The provision for income taxes consisted of the following (in thousands):

	For the Years Ended December 31,
	2016			2015			2014
Currently Payable
Federal	$	34,867		$	67,702		$	72,513
State		5,255			8,387			8,334
Foreign		1,305			1,614			805
Total currently payable		41,427			77,703			81,652
Deferred, net
Federal		(9,554	)		(20,929	)		(9,510	)
State		(779	)		(1,778	)		(1,085	)
Foreign		(291	)		(455	)		(284	)
Total deferred, net		(10,624	)		(23,162	)		(10,879	)
Provision for income taxes	$	30,803		$	54,541		$	70,773

The Company’s effective income tax rates for the years ended December 31, 2016, 2015 and 2014 varied from the statutory federal income tax rate as set forth in the following table (in thousands):

	Years Ended December 31,
	2016						2015					2014
	Amount			% of Pre-tax Income			Amount		% of Pre-tax Income			Amount			% of Pre-tax Income
Tax provision based on the federal statutory rate	$	33,130			35.0	%	$	3,569		35.0	%	$	64,011			35.0	%
State and local income taxes—net of federal income tax benefit		2,639			2.8	%		374		3.6	%		4,362			2.4	%
Impairment of goodwill		-			-			47,468		465.5	%		(4	)		-
Valuation allowances		(4,265	)		-4.5	%		1,217		11.9	%		3,027			1.7	%
Tax effects of foreign dividend payments		1,756			1.8	%		-		-			-			-
Research and Development tax credit		(1,237	)		-1.3	%		-		-			-			-
Non-deductible and other		(1,220	)		-1.3	%		1,913		18.8	%		(623	)		-0.4	%
Provision for income taxes	$	30,803			32.5	%	$	54,541		534.8	%	$	70,773			38.7	%

The deferred tax assets and liabilities resulted from temporary differences in the recognition of certain items for financial and tax accounting purposes. The sources of these differences and the related tax effects were as follows (in thousands):

	As of December 31,
	2016					2015
	Assets			Liabilities		Assets			Liabilities
Accrued expenses	$	16,742		$	-	$	14,287		$	-
Allowance for doubtful accounts		15,155			-		10,355			-
Depreciation and amortization		-			20,643		-			24,362
Intangibles arising from acquisitions		-			22,600		-			25,034
Inventory reserves and adjustments		-			17,900		-			16,086
Pension and post-retirement		11,700			-		14,889			-
Share-based compensation		6,627			-		5,721			-
Income tax credits, capital losses, and net operating losses		10,790			-		14,462			-
Restructuring costs		1,288			-		5,442			-
Other		921			-		1,026			-
Total Deferred		63,223			61,143		66,182			65,482
Valuation Allowance		(5,035	)		-		(9,189	)		-
Net Deferred	$	58,188		$	61,143	$	56,993		$	65,482

Valuation allowances principally relate to federal capital loss carryovers, state tax credits, and net operating losses. As of December 31, 2016, the Company has state tax credit carryforwards of $10.8 million that expire by 2021, state net operating loss carryforwards of $0.6 million that expire by 2033, and acquired federal net operating losses of $5.8 million that expire by 2034.

Accounting for Uncertainty in Income Taxes

The following table shows the changes in gross unrecognized tax benefits, for the years ended December 31, 2016, 2015 and 2014 (in thousands):

	2016			2015			2014
Beginning Balance, January 1	$	3,350		$	3,205		$	3,108
Additions based on tax positions taken during a prior period		713			1			123
Reductions based on tax positions taken during a prior period		(32	)		(14	)		(11	)
Additions based on tax positions taken during the current period		103			425			382
Reductions related to settlement of tax matters		(52	)		(46	)		(70	)
Reductions related to lapses of applicable statutes of limitation		(252	)		(221	)		(327	)
Ending Balance, December 31	$	3,830		$	3,350		$	3,205

The total amount of unrecognized tax benefits as of December 31, 2016, 2015 and 2014 that, if recognized, would affect the effective tax rate are $2.6 million, $2.2 million, and $2.1 million, respectively.

The Company recognizes net interest and penalties related to unrecognized tax benefits in income tax expense. The gross amount of interest and penalties reflected in the Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014 were $0.3 million, $0.1 million, and zero, respectively. The Consolidated Balance Sheets at December 31, 2016 and 2015 include $0.9 million and $0.6 million, respectively, accrued for the potential payment of interest and penalties.

As of December 31, 2016, the Company’s U.S. Federal income tax returns for 2013 and subsequent years remains subject to examination by tax authorities. In addition, the Company’s state income tax returns for the 2008 and subsequent tax years remain subject to examination by state and local tax authorities. The Company is currently under examination by the IRS and a number of state and local examinations are currently ongoing. Due to the potential for resolution of ongoing examinations and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $1.3 million.