INCOME TAXES

Our provisions for income taxes and our cash taxes paid are as follows:



	Year Ended December 31,
(in thousands)	2011			2010		2009
Current:
Domestic	$	14,027		$	16,501	$	10,659
Foreign	80,698			57,006		69,132
Total current	94,725			73,507		79,791
Deferred:
Domestic	8,934			19,730		12,029
Foreign	(1,432		)	11,454		9,602
Total deferred	7,502			31,184		21,631
Total provision for income taxes	$	102,227		$	104,691	$	101,422
Cash taxes paid	$	72,825		$	121,440	$	54,504

The components of income before income taxes are as follows:



	Year Ended December 31,
(in thousands)	2011		2010		2009
Domestic	$	41,831	$	87,776	$	65,174
Foreign	296,054		217,446		224,601
Income before income taxes	$	337,885	$	305,222	$	289,775

As of December 31, 2011 and 2010, our worldwide deferred tax assets, liabilities and net deferred tax liabilities were as follows:



	December 31,
(in thousands)	2011		2010
Deferred tax assets:
Deferred compensation	$	26,923	$	24,791
Deferred income	11,588		19,808
Accrued expenses	8,647		6,675
Other	4,875		5,360
Gross deferred tax assets	52,033		56,634
Valuation allowance	—		—
Total deferred tax assets	$	52,033	$	56,634
Deferred tax liabilities:
Property and equipment	$	88,657	$	74,832
Unremitted foreign earnings	58,195		62,373
Basis difference in equity investments	15,518		17,177
Other	26,477		13,580
Total deferred tax liabilities	$	188,847	$	167,962
Net deferred income tax liability	$	136,814	$	111,328

Our net deferred tax liability is reflected within our balance sheet as follows:



	December 31,
(in thousands)	2011			2010
Deferred tax liabilities	$	157,532		$	139,822
Current deferred tax assets	(20,718		)	(28,494		)
Net deferred income tax liability	$	136,814		$	111,328

We believe it is more likely than not that all our deferred tax assets are realizable. We conduct business through several foreign subsidiaries and, although we expect our consolidated operations to be profitable, there is no assurance that profits will be earned in entities or jurisdictions that have net operating loss carryforwards available. The primary difference between our 2011 effective tax rate of 30.3% and the federal statutory rate of 35% reflects our intent to indefinitely reinvest in certain of our international operations. Therefore, we are no longer providing for U.S. taxes on a portion of our foreign earnings. The effective tax rate of 30.3% in our financial statements for 2011 is a result of our effective rate of 31.5% adjusted by $4.9 million of additional tax benefits, primarily attributable to amending prior years' U.S. federal income tax returns to reflect a broader interpretation of our pre-tax income eligible for certain deductions allowable for oil and gas construction activities, and tax effecting the $19.6 million gain on the sale of the Ocean Legend at the U.S. federal statutory rate of 35%. The primary difference between our 2010 effective tax rate of 34.3% and the federal statutory rate of 35% is the lesser federal tax rate applied to our U.S. manufacturing profits. Income taxes, computed by applying the federal statutory income tax rate to income before income taxes, are not materially different than our actual provisions for income taxes for 2009.

We consider $132 million of unremitted earnings of our foreign subsidiaries to be indefinitely reinvested. It is not practical for us to compute the amount of additional U.S. tax that would be due on this amount. We have provided deferred income taxes on the foreign earnings we expect to repatriate.

We recognize the benefit for a tax position if the benefit is more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that is greater than 50% likely of being realized upon ultimate settlement.

We account for any applicable interest and penalties on uncertain tax positions as a component of our provision for income taxes on our financial statements. We charged $0.4 million, $0.2 million and $0.5 million to income tax expense in 2011, 2010 and 2009, respectively, for penalties and interest on uncertain tax positions, which brought our total liabilities for penalties and interest on uncertain tax positions to $4.4 million and $4.0 million on our balance sheets at December 31, 2011 and 2010, respectively. Including associated foreign tax credits and penalties and interest, we have accrued a net total of $5.6 million in the caption "other long-term liabilities" on our balance sheet for unrecognized tax benefits at December 31, 2011. All additions or reductions to those liabilities affect our effective income tax rate in the periods of change.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, not including associated foreign tax credits and penalties and interest, is as follows:



	Year Ended December 31,
(in thousands)	2011			2010			2009
Beginning of year	$	9,991		$	9,488		$	8,402
Additions based on tax positions related to the current year	947			1,296			1,361
Reductions for expiration of statutes of limitations	(834		)	(793		)	(81		)
Settlements	—			—			(194		)
Balance at end of year	$	10,104		$	9,991		$	9,488

We do not believe that the total of unrecognized tax benefits will significantly increase or decrease in the next 12 months.

We file a consolidated U.S. federal income tax return for Oceaneering International, Inc. and our domestic subsidiaries. We conduct our international operations in a number of locations that have varying laws and regulations with regard to income and other taxes, some of which are subject to interpretation. Our management believes that adequate provisions have been made for all taxes that will ultimately be payable, although final determination of tax liabilities may differ from our estimates.

Our tax returns are subject to audit by taxing authorities in multiple jurisdictions. These audits often take years to complete and settle. The following lists the earliest tax years open to examination by tax authorities where we have significant operations:




Jurisdiction		Periods
United States		2007
United Kingdom		2009
Norway		2001
Angola		2006
Nigeria		2005
Brazil		2006
Australia		2008
Canada		2008