INCOME TAXES

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



	Year Ended December 31,
(in thousands)	2016			2015			2014
Current:
Domestic	$	(6,899	)	$	11,028		$	17,856
Foreign	25,561			65,132			106,575
Total current	18,662			76,160			124,431
Deferred:
Domestic	(8,617		)	40,284			73,520
Foreign	8,715			(11,194		)	(2,803		)
Total deferred	98			29,090			70,717
Total provision for income taxes	$	18,760		$	105,250		$	195,148
Cash taxes paid	$	75,819		$	119,591		$	139,724

The components of income before income taxes are as follows:



	Year Ended December 31,
(in thousands)	2016			2015		2014
Domestic	$	(180,132	)	$	51,018	$	110,800
Foreign	223,478			285,243		512,677
Income before income taxes	$	43,346		$	336,261	$	623,477

As of December 31, 2016 and 2015, our worldwide deferred tax assets, liabilities and net deferred tax liabilities were as follows:



	December 31,
(in thousands)	2016			2015
Deferred tax assets:
Deferred compensation	$	38,602		$	46,973
Deferred income	9,830			18,787
Accrued expenses	24,663			12,624
Other	60,885			55,547
Gross deferred tax assets	133,980			133,931
Valuation allowance	(4,200		)	—
Total deferred tax assets	$	129,780		$	133,931
Deferred tax liabilities:
Property and equipment	$	86,237		$	126,079
Unremitted foreign earnings not considered indefinitely reinvested	257,414			296,018
Basis difference in equity investments	10,055			7,678
Other	—			—
Total deferred tax liabilities	$	353,706		$	429,775
Net deferred income tax liability	$	223,926		$	295,844

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



	December 31,
(in thousands)	2016			2015
Deferred tax liabilities	$	236,113		$	353,181
Current deferred tax assets	—			(57,337		)
Long-term deferred tax assets	(12,187		)	—
Net deferred income tax liability	$	223,926		$	295,844

At December 31, 2016, we had approximately $51 million of foreign tax credits and no U.S. net operating losses available to reduce future payments of U.S. federal income taxes. The tax credits expire commencing in 2024. We assessed the recoverability of our deferred tax assets and believe it is more likely than not that a portion of our loss carryforwards in foreign jurisdictions will not be realized. As a result, we have established a deferred tax asset valuation allowance of $4.2 million.

Reconciliations between the actual provision for income taxes on continuing operations and that computed by applying the United States statutory rate to income before income taxes were as follows:



	Year Ended December 31,
	2016		2015		2014
United States statutory rate	35.0	%	35.0	%	35.0	%
Valuation allowance	9.7		—		—
Foreign tax rate differential	(4.1	)	(2.5	)	(2.6	)
Other items, net	2.7		(1.2	)	(1.1	)
Total effective tax rate	43.3	%	31.3	%	31.3	%

In 2016, we incurred a recapture of a portion of previously-taken U.S. manufacturing deductions. This increased our effective tax rate by 1.9% and this increase is part of the 2.7% of other items, net in the table above.

We consider $623 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 not considered indefinitely reinvested.

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 we believe 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 increased/(decreased) income tax expense by $1.2 million, $(0.9) million and $(0.4) million in 2016, 2015 and 2014, respectively, for penalties and interest on uncertain tax positions, which brought our total liabilities for penalties and interest on uncertain tax positions to $3.2 million and $2.0 million on our balance sheets at December 31, 2016 and 2015, respectively. All additions or reductions to those liabilities would 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)	2016			2015			2014
Beginning of year	$	5,245		$	5,575		$	7,168
Additions based on tax positions related to the current year	1,999			260			432
Reductions for expiration of statutes of limitations	(1,028		)	(1,649		)	(1,572		)
Additions based on tax positions related to prior years	114			1,059			254
Reductions based on tax positions related to prior years	—			—			(707		)
Settlements	—			—			—
Balance at end of year	$	6,330		$	5,245		$	5,575

Including associated foreign tax credits and penalties and interest, we have accrued a net total of $6.4 million in the caption "other long-term liabilities" on our balance sheet at December 31, 2016 for unrecognized tax benefits. 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		2013
United Kingdom		2012
Norway		2006
Angola		2013
Brazil		2010
Australia		2012