Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:



	2016			2015			2014
Current:
Federal	$	45,314		$	82,532		$	101,857
State	7,022			18,022			20,123
International	110,208			85,310			88,707
	162,544			185,864			210,687
Deferred:
Federal	29,973			12,127			(1,097		)
State	7,161			(1,828		)	(2,071		)
International	(9,004		)	(4,466		)	(22,576		)
	28,130			5,833			(25,744		)
	$	190,674		$	191,697		$	184,943

The principal causes of the difference between the U.S. federal statutory tax rate of 35% and effective income tax rates for the years ended December 31 are as follows:



	2016			2015			2014
United States	$	235,256		$	281,579		$	317,400
International	480,141			410,604			365,933
Income before income taxes	$	715,397		$	692,183		$	683,333

Provision at statutory tax rate	$	250,389		$	242,264		$	239,166
State taxes, net of federal benefit	9,219			10,526			11,734
International effective tax rate differential	(64,002		)	(56,132		)	(56,865		)
Change in valuation allowance	7,174			(205		)	(7,803		)
Other non-deductible expenses	3,516			3,530			4,040
Changes in tax accruals	(3,679		)	(7,423		)	1,335
Tax credits	(14,510		)	—			—
Other	2,567			(863		)	(6,664		)
Provision for income taxes	$	190,674		$	191,697		$	184,943

At December 31, 2016, the company had a liability for unrecognized tax benefits of $31,534 (substantially all of which, if recognized, would favorably affect the company's effective tax rate), of which approximately $365 is expected to be paid over the next twelve months. The company does not believe there will be any other material changes in its unrecognized tax positions over the next twelve months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:



	2016			2015			2014
Balance at beginning of year	$	36,935		$	44,701		$	45,987
Additions based on tax positions taken during a prior period	2,356			2,568			3,792
Reductions based on tax positions taken during a prior period	(6,305		)	(9,482		)	(7,737		)
Additions based on tax positions taken during the current period	3,935			8,440			5,518
Reductions related to settlement of tax matters	(2,795		)	(4,143		)	(317		)
Reductions related to a lapse of applicable statute of limitations	(2,592		)	(5,149		)	(2,542		)
Balance at end of year	$	31,534		$	36,935		$	44,701

Interest costs related to unrecognized tax benefits are classified as a component of "Interest and other financing expense, net" in the company's consolidated statements of operations. In 2016, 2015, and 2014, the company recognized $(1,946), $(3,247), and $1,570, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2016 and 2015, the company had a liability for the payment of interest of $6,881 and $8,878, respectively, related to unrecognized tax benefits.

In many cases the company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2016:



United States - Federal		2013 - present
United States - States		2009 - present
Germany (a)		2010 - present
Hong Kong		2011 - present
Italy (a)		2012 - present
Sweden		2011 - present
United Kingdom		2014 - present

(a) Includes federal as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

Effective October 2, 2016, the company adopted the provisions of ASU No. 2015-17 Income Taxes - Balance Sheet Classification of Deferred Taxes on a prospective basis, which resulted in a reclassification of deferred tax liabilities and assets from current to noncurrent. As of December 31, 2016, the significant components of the company's deferred tax assets and liabilities are included in "Other assets," and "Other liabilities" in the company's consolidated balance sheets. As of December 31, 2015 the significant components of the company's deferred tax assets and liabilities are included in "Other current assets," "Other assets," "Accrued expenses," and "Other liabilities" in the company's consolidated balance sheets. The deferred tax assets and liabilities consist of the following at December 31:



	2016			2015
Deferred tax assets:
Net operating loss carryforwards	$	102,710		$	102,005
Inventory adjustments	56,890			48,467
Allowance for doubtful accounts	14,526			13,371
Accrued expenses	40,179			43,044
Interest carryforward	19,073			26,051
Stock-based compensation awards	24,505			26,911
Other comprehensive income items	10,859			16,232
Integration and restructuring	2,970			4,117
Other	17,830			7,892
	289,542			288,090
Valuation allowance	(15,323		)	(8,149		)
Total deferred tax assets	$	274,219		$	279,941

Deferred tax liabilities:
Goodwill	$	(142,541	)	$	(113,788	)
Depreciation	(94,838		)	(83,291		)
Intangible assets	(21,118		)	(31,481		)
Other	—			—
Total deferred tax liabilities	$	(258,497	)	$	(228,560	)
Total net deferred tax assets	$	15,722		$	51,381

At December 31, 2016, the company had international tax loss carryforwards of approximately $289,953, of which $9,388 have expiration dates ranging from 2017 to 2035, and the remaining $280,565 have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $91,088 with a corresponding valuation allowance of $4,812.

The company also has Federal net operating loss carryforwards of approximately $23,454 at December 31, 2016 which relate to acquired subsidiaries. These Federal net operating losses expire in various years beginning after 2027. The company has an agreement with the sellers of an acquired business to reimburse them for the company's utilization of certain Federal net operating loss carryforwards.

Valuation allowances reflect the deferred tax benefits that management is uncertain of the ability to utilize in the future.

Cumulative undistributed earnings of international subsidiaries were $2,848,219 at December 31, 2016. No deferred Federal income taxes were provided for the undistributed earnings as they are permanently reinvested in the company's international operations.

Income taxes paid, net of income taxes refunded, amounted to $190,109, $182,668, and $223,909 in 2016, 2015, and 2014, respectively.