9. INCOME TAXES

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2011 and for state examinations before 2008. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2003 in Asia and generally 2007 in Europe.

As a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company's condensed consolidated financial statements at June 30, 2015. An immaterial amount of previously recorded liabilities for uncertain tax positions relates principally to the 2011 tax year. The statute of limitations related to these liabilities is scheduled to expire on September 15, 2015.

The Company's liabilities for uncertain tax positions are included in the following balance sheet captions:

	June 30,		December 31,
	2015		2014
Income taxes payable	$	38	$	203
Liability for uncertain tax positions		41,426		39,767
	$	41,464	$	39,970

As part of the acquisition of Power Solutions the Company acquired a $35.8 million liability for uncertain tax positions. Of this amount, $12.0 million relates to an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd.) for the years 2004 through 2006. The Company also acquired a liability for additional uncertain tax positions related to various tax matters for the years 2007 through 2013. At the conclusion of the measurement period related to the Power Solutions acquisition and as of June 30, 2015, certain of these tax matters were being pursued with the applicable taxing authority. From the date of acquisition through June 30, 2015, the Company has recorded $2.5 million of interest and penalties pertaining to this issue and will continue to accrue applicable interest and penalties until the matters are resolved or upon expiration of the respective statute of limitations. Any changes in facts and circumstances related to these tax matters will be recorded on a prospective basis and not included as purchase price adjustments. Of the amounts noted in the table above, $29.5 million at June 30, 2015 and $2.8 million at December 31, 2014, if recognized, would reduce the Company's effective tax rate.

The Company's policy is to recognize interest and penalties related to unrecognized tax benefits arising from uncertain tax positions as a component of the current provision for income taxes. During the six months ended June 30, 2015 and 2014, the Company recognized $1.4 million and an immaterial amount, respectively, in interest and penalties in the condensed consolidated statements of operations. During the six months ended June 30, 2015, the Company recognized a benefit of an immaterial amount for the reversal of such interest and penalties. The Company has approximately $3.0 million and $1.6 million, accrued for the payment of such interest and penalties at June 30, 2015 and December 31, 2014, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the condensed consolidated balance sheets.

Upon completion of the acquisitions of Power Solutions and Connectivity Solutions, there were net deferred tax assets of $2.2 million and $1.2 million, respectively, arising from various temporary differences and net operating loss carry forward acquired, which are included in the condensed consolidated balance sheet at June 30, 2015. In connection with the 2014 Acquisitions, the Company was required to complete a fair market value report of property, plant and equipment and intangibles. As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amount of $3.1 million and $16.4 million, respectively, for the Power Solutions and Connectivity Solutions acquisitions. At June 30, 2015, a net deferred tax liability of $12.4 million remains on the condensed consolidated balance sheet for the 2014 Acquisitions. The amounts for the Connectivity Solutions acquisition are preliminary since the measurement period for this acquisition is still open. The amounts will be finalized prior to the conclusion of the measurement period, which will not exceed one year from the respective acquisition dates. See Note 2, Acquisitions and Disposition, for further information about the 2014 Acquisitions.

The Company intends to make elections to step up the tax basis to fair value under IRC Section 338(g) for the Power Solutions acquisitions and for certain jurisdictions with respect to the Connectivity Solutions acquisition. The elections made under Section 338(g) only affect U.S. income taxes (not those of the foreign country where the acquired entities were incorporated).

On December 31, 2013, under the "American Taxpayer Relief Act" ("ATRA"), the Research and Experimentation credit ("R&E") expired. On December 16, 2014, the R&E credit was extended back to January 1, 2014. The R&E credits for the year ending 2015 have not been extended.

The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.