Income Taxes

The components of income before income taxes and income tax expense for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):



	Years ended December 31,
	2016			2015			2014
Income before income taxes:
Domestic	$	13,988		$	18,656		$	38,359
Foreign	16,046			10,967			4,464
Total income before income taxes	$	30,034		$	29,623		$	42,823

Income tax expense (benefit):
Current:
Federal	$	5,511		$	6,802		$	11,799
State and local	1,152			1,418			2,600
Foreign	4,885			3,710			1,439
Total current	11,548			11,930			15,838
Deferred:
Federal	(1,039		)	(198		)	(9		)
State and local	56			23			(23		)
Foreign	(778		)	(921		)	(81		)
Total deferred	(1,761		)	(1,096		)	(113		)
Total income tax expense	$	9,787		$	10,834		$	15,725

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before income taxes. The sources and tax effects of the differences are as follows:



	December 31,
	2016		2015		2014
Federal income tax rate	35.0	%	35.0	%	35.0	%
State and local taxes net of federal benefit	2.4		3.2		4.3
Domestic production deduction	(0.6	)	(0.6	)	(3.7	)
Foreign tax rate differential	(5.8	)	(4.3	)	(0.2	)
Permanent differences	4.8		2.1		2.0
Other	(3.2	)	1.2		(0.7	)
Effective tax rate	32.6	%	36.6	%	36.7	%

The decrease in the effective income tax rate in 2016 compared to 2015 is primarily due to a change in the mix of taxable income from higher taxing jurisdictions to lower taxing jurisdictions.

Uncertain Tax Positions

As of December 31, 2016 and 2015, we had no uncertain tax positions reflected on our consolidated balance sheet. The Company files income tax returns in U.S. federal, state and local jurisdictions, and various non-U.S. jurisdictions, and is subject to audit by tax authorities in those jurisdictions. Tax years 2013 through 2015 remain open to examination by these tax jurisdictions, and earlier years remain open to examination in certain of these jurisdictions which have longer statutes of limitations.

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2016			2015
Deferred tax assets:
Allowance for doubtful accounts	$	357		$	692
Accrued liabilities and other	3,156			2,807
Stock-based compensation expense	910			569
Net federal, state and foreign operating loss carryforwards	1,292			1,039
Foreign tax credit carryforwards	1,207			—
Deferred tax assets	6,922			5,107
Valuation allowance on deferred tax assets	(1,320		)	(1,194		)
Deferred tax liabilities:
Intangible assets, property and equipment, principally due to difference in depreciation and amortization	7,668			7,519
Net deferred tax liabilities	$	(2,066	)	$	(3,606	)

As of December 31, 2016, we had foreign net operating loss carryforwards of $6.1 million for tax purposes, which will be available to offset future taxable income. If not used, these carryforwards will expire beginning in 2018. In addition, as of December 31, 2016, we have foreign tax credit carryforwards of $1.2 million which are available to offset future federal taxable income. If not used, these credits will begin to expire in 2020.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets may not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon these factors, management placed a valuation allowance of $1.3 million and $1.2 million as of the years ended December 31, 2016 and 2015, respectively, against certain deferred tax assets, including net operating loss carryforwards, due to the uncertainty of future profitability in foreign jurisdictions. Management believes it is more likely than not that the Company will realize the benefits of the remaining deferred tax assets.

Foreign Income

As of December 31, 2016, we had approximately $42.1 million of accumulated undistributed earnings generated by our foreign subsidiaries. No provision has been made for income taxes that would be payable upon the distribution of such earnings since we intend to permanently reinvest these earnings. If these earnings were distributed in the form of dividends or otherwise, the distributions would be subject to U.S. federal income tax at the statutory rate of 35 percent, less foreign tax credits available to offset such distributions, if any. In addition, such distributions may be subject to withholding taxes in the various tax jurisdictions. Determination of the deferred income tax liability on undistributed earnings is not practicable due the complexities associated with calculating a liability which is dependent on future circumstances existing if and when a distribution occurs.