INCOME TAXES

Components of the provision for income taxes and the income to which it relates for the years ended December 31, 2015, 2014 and 2013 consist of the following (in thousands):



	Year Ended December 31,
	2015			2014			2013
Income from continuing operations before income taxes (1):
Domestic	$	27,599		$	50,984		$	43,936
Foreign	60,082			65,996			76,256
Income from continuing operations before income taxes	$	87,681		$	116,980		$	120,192

Current income taxes:
Federal	$	7,933		$	11,494		$	22,468
Foreign	18,763			17,823			20,392
State and local	705			1,097			781
Current provision for income taxes	27,401			30,414			43,641

Deferred provision (benefit) for income taxes:
Federal	931			2,232			(799		)
Foreign	(1,414		)	(1,232		)	(7,218		)
State and local	53			128			89
Total deferred provision (benefit) for income taxes	(430		)	1,128			(7,928		)

Provision for income taxes	$	26,971		$	31,542		$	35,713


(1)	Includes the allocation of certain administrative expenses and the payment of royalties between domestic and foreign subsidiaries.

The provision for income taxes related to discontinued operations was a $0, $147,000 and $341,000 benefit for the years ended December 31, 2015, 2014 and 2013, respectively.

In July 2013, the Company terminated an election to include foreign subsidiaries in its consolidated U.S. federal income tax return (the “Tax Restructuring”) and it is the Company’s intent to indefinitely reinvest the earnings of these subsidiaries outside the U.S. Accordingly, under U.S. income tax law, as of December 31, 2015, the undistributed earnings of the foreign subsidiaries are not subject to current U.S. federal income taxes. The cumulative amount of indefinitely reinvested earnings of foreign subsidiaries is $101,961,000 at December 31, 2015. These earnings would be subject to additional U.S. taxes of $6,507,000 if the earnings were repatriated into the U.S. for 2015.

As a result of the Tax Restructuring, the Company recognized an estimated non-recurring net income tax benefit of approximately $3,979,000 during fiscal 2013 consisting of a $3,436,000 income tax benefit from the elimination of certain U.S. deferred tax liabilities associated with foreign operations and an estimated $5,398,000 income tax benefit arising from the recognition of certain foreign deferred tax assets, partially offset by an estimated $4,855,000 in additional U.S. income tax expense. In 2014, the Company prepared and filed federal income tax returns in both the U.S. and Mexico for the fiscal 2013 tax year which reflected the effects of the Tax Restructuring, including changes in certain previously estimated current and deferred tax amounts. As a result, the Company recorded fiscal 2014 non-recurring income tax benefits of $3,742,000 from the change in estimated U.S. income tax liabilities related to the Tax Restructuring and $2,099,000 from the recognition of additional estimated foreign deferred tax assets as a result of the Tax Restructuring.

The principal deferred tax assets and liabilities consist of the following at December 31, 2015 and 2014 (in thousands):



	December 31,
	2015			2014
Deferred tax assets:
Depreciation	$	5,652		$	6,010
Accrued fees on forfeited pawn loans	3,784			3,864
Deferred cost of goods sold deduction	2,101			2,391
Accrued compensation	859			778
Share-based compensation	507			—
Other	1,875			1,710
Total deferred tax assets	14,778			14,753

Deferred tax liabilities:
Intangible asset amortization	22,761			21,443
Depreciation	3,093			—
Share-based compensation	—			222
Other	1,067			1,241
Total deferred tax liabilities	$	26,921		$	22,906

Net deferred tax liabilities	$	(12,143	)	$	(8,153	)

Reported as:
Deferred tax assets	$	9,321		$	9,070
Deferred tax liabilities	(21,464		)	(17,223		)
Net deferred tax liabilities	$	(12,143	)	$	(8,153	)

The Company has evaluated the nature and timing of its deferred tax assets and concluded that no valuation allowance is necessary. Also, see Note 2 Revisions and reclassifications for a discussion of a revision made to the Company’s consolidated balance sheet as of December 31, 2014 impacting a previously reported deferred tax asset related to the cumulative foreign currency translation adjustment.

The effective rate on income from continuing operations differs from the U.S. federal statutory rate of 35%. The following is a reconciliation of such differences (in thousands):



	Year Ended December 31,
	2015			2014			2013
Tax at the U.S. federal statutory rate	$	30,688		$	40,943		$	42,067
State income taxes, net of federal tax benefit of $265, $429 and $273, respectively	493			796			508
Rate benefit from foreign earnings	(3,531		)	(4,576		)	(2,281		)
Net non-recurring benefit of Tax Restructuring	—			(5,841		)	(3,979		)
Other taxes and adjustments, net	(679		)	220			(602		)
Provision for income taxes	$	26,971		$	31,542		$	35,713
Effective tax rate	30.8		%	27.0		%	29.7		%

Prior to the Tax Restructuring in July 2013, the Company’s foreign operations were included in its consolidated U.S. federal income tax return and effectively taxed at the U.S. federal statutory rate of 35%. Following the Tax Restructuring, the Company’s foreign operations are subject to their respective foreign statutory rates, which are lower than the U.S. federal statutory rate of 35%. Excluding the net non-recurring benefits recorded in 2014 and 2013 related to the Tax Restructuring, the consolidated tax rate was 32.0% and 33.0% for fiscal 2014 and 2013, respectively, reflecting the blended statutory federal tax rates of 35% in the U.S. and 30% in Mexico.

The Company reviews the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax liabilities that could arise would be classified as interest expense in the Company’s consolidated statements of income. There were no such interest or penalties for the fiscal years ended December 31, 2015, 2014 and 2013.

As of December 31, 2015 and 2014, the Company had no unrecognized tax benefits and, therefore, the Company did not have a liability for accrued interest and penalties. The Company does not believe its unrecognized tax benefits will significantly change over the next twelve months.

The Company files federal income tax returns in the United States, Mexico and Guatemala, as well as multiple state and local income tax returns in the United States. The Company’s U.S. federal returns are not subject to examination for tax years prior to 2012. The Company’s U.S. state income tax returns are not subject to examination for the tax years prior to 2012 with the exception of three states, which are not subject to examination for tax years prior to 2011. With respect to federal tax returns in Mexico and Guatemala, the tax years prior to 2010 are closed to examination. There are no state income taxes in Mexico or Guatemala.