13.	Income taxes

Income (loss) from continuing operations before provision for income taxes consisted of:

	Year Ended December 31,
(U.S. Dollars in thousands)	2015			2014			2013

U.S.	$	15,480		$	17,532		$	(3,546	)
Non-U.S.		(6,973	)		(5,076	)		(7,057	)
Total income (loss) before taxes	$	8,507		$	12,456		$	(10,603	)

The provision for (benefit from) income taxes on continuing operations in the accompanying consolidated statements of operations consists of the following:

	Year Ended December 31,
(U.S. Dollars in thousands)	2015			2014			2013
U.S.
Current	$	6,792		$	5,067		$	2,465
Deferred		(1,146	)		2,825			4,013
Total U.S		5,646			7,892			6,478
Non-U.S.
Current		3,661			18,186			2,308
Deferred		1,542			(9,878	)		(1,184	)
		5,203			8,308			1,124
Total tax expense	$	10,849		$	16,200		$	7,602

Deferred income taxes are provided primarily for net operating loss carryforwards and for temporary differences resulting from items that are recognized in different years for financial statement and income tax reporting purposes. The Company’s deferred tax assets and liabilities are as follows:

	December 31,
(U.S. Dollars in thousands)	2015			2014
Intangible assets and goodwill	$	2,931		$	4,067
Inventories and related reserves		17,640			19,525
Deferred revenue and cost of goods sold		11,189			10,826
Other accruals and reserves		7,729			5,371
Accrued compensation		2,964			5,004
Allowance for doubtful accounts		2,863			2,094
Accrued interest		17,300			17,555
Net operating loss carryforwards		38,010			34,514
Other, net		4,441			1,202
		105,067			100,158
Valuation allowance		(43,340	)		(37,438	)
Deferred tax asset	$	61,727		$	62,720
Withholding taxes		(253	)		(229	)
Property, plant and equipment		(4,168	)		(6,766	)
Deferred tax liability		(4,421	)		(6,995	)
Net deferred tax assets	$	57,306		$	55,725

The increase in the valuation allowance of $5.9 million during the year principally relates to certain current year foreign losses incurred without an income tax benefit. The valuation allowance is attributable to net operating loss carryforwards and certain temporary differences in certain foreign jurisdictions, for which it is more likely than not some portion or all of the deferred tax asset will not be realized.

The Company has state net operating loss carryforwards of approximately $11.9 million that will begin to expire in 2016. Additionally, the Company has net operating losses in foreign taxing jurisdictions of approximately $154.5 million, the majority of which relate to the Company’s Netherlands operations that begin to expire in 2016. The Company has provided a valuation allowance against a significant portion of these net operating loss carryforwards since it does not believe that it is more likely than not that this deferred tax asset can be realized prior to expiration.

The rate reconciliation for continuing operations presented below is based on the U.S. federal income tax rate, rather than the parent company’s country of domicile tax rate. Management believes, given the large proportion of taxable income earned in the United States, such disclosure is more meaningful.

(U.S. Dollars in thousands, except percentages)	2015						2014						2013
	Amount			Percent			Amount			Percent			Amount			Percent
Statutory U.S. federal income tax rate	$	2,978			35	%	$	4,360			35.0	%	$	(3,711	)		35.0	%
State taxes, net of U.S. federal benefit		521			6.1			1,439			11.6			2,039			(19.2	)
Foreign rate differential, including withholding taxes		(1,934	)		(22.7	)		2,386			19.1			747			(7.0	)
Valuation allowance		10,952			128.7			8,672			69.6			3,913			(36.9	)
Italian subsidiary intangible asset		(2,076	)		(24.4	)		(2,546	)		(20.4	)		(2,288	)		21.6
Goodwill impairment		—			—			—			—			6,452			(60.9	)
Domestic manufacturing deduction		(469	)		(5.5	)		(377	)		(3.0	)		(233	)		2.2
Italian audit settlement		—			—			1,048			8.4			—			—
Other, net		877			10.3			1,218			9.8			683			(6.5	)
Income tax expense/effective rate	$	10,849			127.5	%	$	16,200			130.1	%	$	7,602			(71.7	)%

The Company’s unrecognized tax benefit was $15.8 million and $15.6 million for the years ended December 31, 2015 and 2014, respectively. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. The Company had approximately $0.8 million and $0.5 million accrued for payment of interest and penalties as of December 31, 2015 and 2014, respectively.

The entire amount of unrecognized tax benefits, including interest, would favorably impact the Company’s effective tax rate if recognized. As of December 31, 2015, the Company does not expect the amount of unrecognized tax benefits to change significantly over the next twelve months.

A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2015 and December 31, 2014 follows:

(U.S. Dollars in thousands)	2015			2014
Balance as of January 1,	$	15,597		$	723
Additions for current year tax positions		332			14,794
Increases (decreases) for prior year tax positions		(86	)		145
Settlements of prior year tax positions		—			—
Expiration of statutes		(80	)		(65	)
Balance as of December 31,	$	15,763		$	15,597

The Company files a consolidated income tax return in the U.S. federal jurisdiction, the U.K., Italy and numerous consolidated and separate income tax returns in many state and other foreign jurisdictions. The statute of limitations with respect to federal tax authorities is closed for years prior to December 31, 2012. The statute of limitations for the various state tax filings is closed in most instances for the years prior to December 31, 2011. The statute of limitations with respect to the major foreign tax filing jurisdictions is closed for years prior to December 31, 2010.

During the third quarter of 2015, the Internal Revenue Service commenced an examination of our federal income tax return for 2012. The Company cannot reasonably determine if this examination, or any state and local tax examinations, will have a material impact on our financial statements and cannot predict the timing regarding resolution of these tax examinations.

The Company’s current intention is to indefinitely reinvest the total amount of its unremitted foreign earnings (residing outside Curaçao) in the local jurisdiction. As an entity incorporated in Curaçao, “foreign subsidiaries” refer to both U.S. and non-U.S. subsidiaries. Furthermore, only income sourced in the U.S. is subject to U.S. income tax. Unremitted foreign earnings increased from $374.1 million at December 31, 2014 to $439.2 million at December 31, 2015. The $439.2 million includes $448.8 million in U.S subsidiaries. It is not practicable to determine the amounts of net additional income tax that may be payable if such earnings were repatriated.