INCOME TAXES

Income before income taxes by jurisdiction is as follows:



	2015		2014		2013
	(In thousands)
U.S.	$	920,250	$	953,027	$	469,395
Foreign	72,508		149,364		104,545
Total	$	992,758	$	1,102,391	$	573,940

The components of income tax expense (benefit) are set forth below:



	2015			2014		2013
	(In thousands)
Current:
Federal	$	248,821		$	262,403	$	(427	)
Foreign	43,638			22,867		26,206
State and other	26,019			24,056		3,512
Total current	318,478			309,326		29,291
Deferred:
Federal	32,819			29,737		22,923
Foreign	(11,249		)	31,332		(3,648		)
State and other	6,748			20,558		(24,339		)
Total deferred	28,318			81,627		(5,064		)
	$	346,796		$	390,953	$	24,227

The effective tax rate for 2015 was 34.9% compared to 35.5% for 2014.

The effective tax rate for 2013 was 4.2%. The effective tax rate for 2014 differed from 2013 primarily as a result of decreases in the valuation allowance and reserves for unrecognized tax benefits during 2013 that did not occur during 2014.

The following table reconciles the statutory U.S. federal income tax rate to the Company’s effective income tax rate:



	2015			2014			2013
Federal income tax rate	35.0		%	35.0		%	35.0		%
State tax rate, net	2.3			2.6			2.3
Permanent items	0.1			0.4			1.4
Domestic production activity	(1.9	)		(2.4	)		(1.2	)
Difference in U.S. statutory tax rate and foreign country effective tax rate	(0.9	)		(1.0	)		(1.0	)
Tax credits	(0.7	)		—			(3.0	)
Change in valuation allowance	—			—			(31.0	)
Other	1.0			0.9			1.7
Total	34.9		%	35.5		%	4.2		%

Significant components of the Company’s deferred tax liabilities and assets are as follows:



	December 27, 2015			December 28, 2014
	(In thousands)
Deferred tax liabilities:
PP&E and identified intangible assets	$	151,761		$	126,537
Inventories	97,743			48,365
Insurance claims and losses	39,800			36,953
Other	15,054			26,801
Total deferred tax liabilities	304,358			238,656
Deferred tax assets:
Net operating losses	4,297			5,842
Foreign net operating losses	16,595			7,873
Credit carry forwards	2,638			2,916
Allowance for doubtful accounts	4,382			4,261
Accrued liabilities	56,753			52,772
Workers compensation	41,217			43,309
Pension and other postretirement benefits	22,559			26,049
Other	31,956			30,612
Total deferred tax assets	180,397			173,634
Valuation allowance	(7,921		)	(9,150		)
Net deferred tax assets	172,476			164,484
Net deferred tax liabilities	$	131,882		$	74,172

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 will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment.

As of December 27, 2015, the Company believes it has sufficient positive evidence to conclude that realization of its federal and state net deferred tax assets is more likely than not to be realized. The decrease in valuation allowance of $1.2 million during 2015 was primarily due to a decrease in foreign net operating losses. As of December 27, 2015, the Company's valuation allowance is $7.9 million, of which $1.3 million relates to capital loss carry forwards and state net operating losses and $6.6 million relates to its Mexico operations.

As of December 27, 2015, the Company had state net operating loss carry forwards of approximately $130.7 million that will begin to expire in 2016. The Company also had Mexico net operating loss carry forwards at December 27, 2015 of approximately $55.8 million that begin to expire in 2016.

As of December 27, 2015, the Company had approximately $2.6 million of state tax credit carry forwards that begin to expire in 2016.

On November 6, 2009, H.R. 3548 was signed into law and included a provision that allowed most business taxpayers an increased carry back period for net operating losses incurred in 2008 or 2009. As a result, during 2009 the Company utilized $547.7 million of its U.S. federal net operating losses under the expanded carry back provisions of H.R. 3548 and filed a claim for refund of $169.7 million. The Company received $122.6 million in refunds from the Internal Revenue Service (“IRS”) from the carry back claims during 2010. The Company anticipates receipt of the remainder of its claim pending resolution of its litigation with the IRS. See “Note 17. Commitments and Contingencies” for additional information.

The Company has not provided any deferred income taxes on the undistributed earnings of its Mexico and Puerto Rico subsidiaries as of December 27, 2015 based upon the determination that such earnings will be indefinitely reinvested. It is not practicable to determine the amount of incremental taxes that might arise if these earnings were to be remitted.

As of December 27, 2015, there is a tax effect of $6.5 million reflected in additional paid-in capital due to excess tax benefits related to compensation on dividend equivalent rights and vested stock awards. As of December 28, 2014, there is a tax effect of $0.5 million reflected in additional paid-in-capital due to excess tax benefits related to compensation.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



	December 27, 2015			December 28, 2014
	(In thousands)
Unrecognized tax benefits, beginning of year	$	17,396		$	17,117
Increase as a result of tax positions taken during the current year	1,015			999
Increase as a result of tax positions taken during prior years	27			—
Decrease as a result of tax positions taken during prior years	(139		)	(101		)
Decrease for lapse in statute of limitations	(1,189		)	(619		)
Unrecognized tax benefits, end of year	$	17,110		$	17,396

Included in unrecognized tax benefits of $17.1 million at December 27, 2015, was $8.5 million of tax benefits that, if recognized, would reduce the Company's effective tax rate. It is not practicable at this time to estimate the amount of unrecognized tax benefits that will change in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 27, 2015, the Company had recorded a liability of $9.4 million for interest and penalties. During 2015, accrued interest and penalty amounts related to uncertain tax positions decreased by $0.8 million.

The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and Mexico. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations for years prior to 2010 and is no longer subject to Mexico income tax examinations by taxing authorities for years prior to 2009.

The United States Fifth Circuit Court of Appeals (the “Fifth Circuit”) rendered judgment in favor of the Company regarding the IRS' amended proof of claim relating to the tax year ended June 26, 2004 for Gold Kist Inc. (“Gold Kist”). See “Note 17. Commitments and Contingencies” for additional information.

On September 13, 2013, the IRS issued the final, revised Tangible Property Repair Regulations for IRC Sections 162(a) and 263(a) which modify and supersede the Temporary Regulations that were issued on December 23, 2011. In addition, the IRS also released new proposed regulations for dispositions of tangible property under IRC Section 168. These final and proposed regulations are effective for tax years beginning January 1, 2014. The Company assessed the applicability of the regulations and concluded there was no significant impact to the Company’s tax fixed assets.

The Company entered into a tax sharing agreement during 2014 with JBS USA Holdings effective for tax years starting 2010. The net tax receivable for tax year 2015 was accrued in 2015. The net tax receivable for tax years 2010 through 2014 was accrued in 2014.