10. Income Taxes

Income before income taxes by geographic area was, for the years ended December 31:


(in thousands)	2015			2014		2013
Federal	$	45,456		$	57,950	$	54,872
Foreign		(1,157	)		—		—
	$	44,299		$	57,950	$	54,872

The income tax provision consisted of the following for the years ended December 31:


(in thousands)	2015			2014		2013
Current
Federal	$	12,433		$	14,720	$	16,812
State		3,006			3,031		2,920
		15,439			17,751		19,732
Deferred
Federal		1,553			3,154		218
Foreign		(272	)		—		—
State		277			501		163
		1,558			3,655		381
Income tax expense	$	16,997		$	21,406	$	20,113

The differences between the U.S. federal statutory tax rate and the Company’s effective tax rate for continuing operations were as follows for the years ended December 31:


	2015			2014			2013
U.S federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of U.S. federal income tax expense		4.6			3.6			3.5
Provision to return adjustments, net		0.5			0.2			(0.3	)
Tax differential on foreign earnings		0.3			—			—
Domestic production/manufacturing deduction		(2.4	)		(2.3	)		(2.0	)
Non-deductible meals and entertainment		0.6			0.4			0.4
Expiration of uncertain tax positions		(0.4	)		—			—
Other, net		0.2			—			0.1
Effective rate		38.4	%		36.9	%		36.7	%

The net deferred tax assets and (liabilities) arising from temporary differences was as follows at December 31:


(in thousands)	2015			2014
Deferred income tax assets:
Self insurance reserves	$	7,464		$	8,369
Contract loss reserves		240			72
Stock-based awards		3,986			4,420
Bonus		2,497			2,578
Other		960			886
Total deferred income tax assets		15,147			16,325
Deferred income tax liabilities:
Property and equipment – tax over book depreciation		(25,859	)		(25,350	)
Intangible assets – tax over book amortization		(3,670	)		(3,799	)
Total deferred income tax liabilities		(29,529	)		(29,149	)
Net deferred income taxes	$	(14,382	)	$	(12,824	)

As of December 31, 2015, the Company had no undistributed earnings of our Canadian subsidiary. We expect future earnings to be reinvested. Accordingly, no provision for U.S. income taxes or foreign withholding taxes has been made.

The Company is subject to taxation in various jurisdictions. The Company is currently under examination by U.S. federal authorities for the open tax years 2012 through 2014 and subject to examination by various state authorities for the years 2011 through 2014.

The Company has recorded a liability for unrecognized tax benefits related to tax positions taken on its various income tax returns. If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods. The Company anticipates the total unrecognized tax benefits will be reduced within the next 12 months due to the lapses in the applicable statutes of limitations, as well as pending federal tax settlements for the three years under examination. The adjustment related to these items is estimated at approximately $0.3 million. Interest and penalties related to uncertain income tax positions are included as a component of income tax expense in the Financial Statements.

The following is a reconciliation of the beginning and ending liability for unrecognized tax benefits at December 31:


(in thousands)	2015			2014
Balance at beginning of period	$	507		$	657
Gross increases in current period tax positions		62			93
Gross increases in prior period tax positions		19			—
Gross decreases in prior period tax positions		(163	)		(243	)
Balance at end of period		425			507
Accrued interest and penalties at end of period		139			223
Total liability for unrecognized tax benefits	$	564		$	730

The liability for unrecognized tax benefits, including accrued interest and penalties, was included in other liabilities in the accompanying consolidated balance sheets. The amount of interest and penalties charged or credited to income tax expense as a result of the unrecognized tax benefits was not significant in the years ended December 31, 2015, 2014 and 2013.