12.	Income Taxes

Income (loss) before income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2017				2016			2015
	(in thousands)

Domestic		$	5,432		$	4,558		$	3,500
Foreign			(7	)		(191	)		4,469
		$	5,425		$	4,367		$	7,969

The income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2017			2016		2015
	(in thousands)
Current:
Federal	$	(149	)	$	1,155	$	488
State		42			177		80
Foreign		655			730		2,047
Total current		548			2,062		2,615

Deferred:
Federal		2,075			587		1,379
State		308			269		172
Foreign		(459	)		841		(397	)
Total deferred		1,924			1,697		1,154
Total income tax provision	$	2,472		$	3,759	$	3,769

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2017			2016			2015
	(in thousands)

Income tax provision at the U.S. federal statutory income tax rate	$	1,845		$	1,485		$	2,709
Foreign dividend income		240			263			508
State taxes, net of federal benefit		200			312			166
Brazil valuation allowance		137			1,582			---
Other permanent differences		54			88			209
Peru non-deductible expenses		53			59			167
Other foreign taxes, net of federal benefit		14			153			161
International rate differences		2			(145	)		(338	)
Income from "pass-through" entities taxable to noncontrolling partners		(1	)		(39	)		31
Re-evaluation and settlements of tax contingencies		(33	)		---			---
Canada and China valuation allowance		(39	)		1			156
Income tax provision, as reported on the consolidated statements of operations	$	2,472		$	3,759		$	3,769

The significant components of deferred tax assets and liabilities are summarized in the following table.

	Balance at July 31,
	2017			2016
	(in thousands)
Deferred tax assets:
Contract and other reserves	$	520		$	3,023
Accrued compensation and expenses		752			734
Net operating loss carryforwards		1,470			1,265
Foreign and state income taxes		17			59
Foreign tax credit		296			296
Federal benefit from foreign tax audits		---			157
Other		714			(26	)
Deferred tax assets		3,769			5,508
Less: valuation allowance		(2,020	)		(2,278	)
Net deferred tax assets	$	1,749		$	3,230

Deferred tax liabilities:
Federal expense on state deferred taxes	$	(73	)	$	(133	)
Fixed assets and intangibles		(144	)		(759	)
Federal expense from foreign accounting differences		(332	)		(213	)
Net deferred tax liabilities	$	(549	)	$	(1,105	)

As of July 31, 2017, net operating losses attributable to operations in Brazil, Peru, Chili and Canada and net operating losses for U.S. federal and state income tax purposes exist. The U.S. federal net operating loss at July 31, 2017 is approximately $0.8 million.

The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary. Activity within the deferred tax asset valuation allowance is summarized in the following table.

	Fiscal Year Ended July 31,
	2017			2016
	(in thousands)

Balance at beginning of period	$	2,278		$	560
Additions during the period		2			1,765
Reductions during period		(260	)		(47	)
Balance at end of period	$	2,020		$	2,278

The valuation allowance maintained by the Company primarily relates to: (i) net operating losses in Brazil and Canada, the utilization of which is dependent on future earnings; (ii) excess foreign tax credit carryforwards, the utilization of which is dependent on future foreign source income; and (iii) capital loss carryforwards, the utilization of which is dependent on future capital gains. Additions to the valuation allowance during fiscal year 2017 primarily related to a deferred tax asset that resulted from net operating loss carryforwards from the Company’s Brazilian operations. During fiscal year 2017, based on available evidence including recent cumulative operating losses, management determined that it is more likely than not that these deferred tax assets will not be realized.

During the fiscal years ended July 31, 2017, 2016 and 2015, the Company recorded $0.3 million, $0.1 million and $0, respectively, of income taxes applicable to undistributed earnings of foreign subsidiaries that will not be indefinitely reinvested in those operations. At July 31, 2017, the Company’s operations in Chile, Peru and Ecuador had $7.1 million of combined undistributed earnings that were indefinitely reinvested in those operations.

The Company files numerous consolidated and separate income tax returns in U.S. federal, state and foreign jurisdictions. The Company’s U.S. federal tax matters for fiscal years 2014 through 2017 remain subject to examination by the IRS. The Company’s state, local and foreign tax matters for fiscal years 2013 through 2017 remain subject to examination by the respective tax authorities. No waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute.

The Company had approximately $0.3 million, $0.1 million and $0.1 million of uncertain tax positions (“UTPs”) at July 31, 2017, 2016 and 2015, respectively. For the year ended July 31, 2017, the company reversed a previously recorded uncertain tax position and associated penalties and interest for approximately $0.1 and recorded additional UTPs of approximately $0.3 with additional interest and penalties of $0.1 million. It is reasonably possible that the liability associated with UTPs will increase or decrease within the next twelve months. At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

The Company recognizes interest accrued related to liabilities for UTPs in other accrued liabilities on the consolidated balance sheets and in administrative and indirect operating expenses on the consolidated statements of operations. The Company recorded interest and penalties expense related to liabilities for UTPs for $0.1 million during fiscal year ended July 31, 2017 and less than $0.1 million for fiscal years 2016 and 2015.