10. Income Taxes

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

(in thousands)	2016			2015			2014
Federal	$	39,419		$	45,456		$	57,950
Foreign		(1,074	)		(1,157	)		—
	$	38,345		$	44,299		$	57,950

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

(in thousands)	2016		2015			2014
Current
Federal	$	9,838	$	12,433		$	14,720
State		2,871		3,006			3,031
		12,709		15,439			17,751
Deferred
Federal		2,491		1,553			3,154
Foreign		481		(272	)		—
State		1,233		277			501
		4,205		1,558			3,655
Income tax expense	$	16,914	$	16,997		$	21,406

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:

	2016			2015			2014
U.S federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of U.S. federal income tax expense		5.2			4.6			3.6
Provision to return adjustments, net		0.8			0.5			0.2
Tax differential on foreign earnings		2.2			0.3			—
Domestic production/manufacturing deduction		(1.9	)		(2.4	)		(2.3	)
Deferred tax adjustments, net		1.6			—			—
Non-deductible meals and entertainment		1.0			0.6			0.4
Expiration of uncertain tax positions		—			(0.4	)		—
Other income, net		0.2			0.2			—
Effective rate		44.1	%		38.4	%		36.9	%

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

(in thousands)	2016			2015
Deferred income tax assets:
Self insurance reserves	$	6,670		$	7,464
Contract loss reserves		257			240
Stock-based awards		2,554			3,986
Bonus		2,908			2,497
Non-U.S. operating loss		595			373
Other		1,652			1,484
Total deferred income tax assets before valuation allowances		14,636			16,044
Less: valuation allowances		(595	)		—
Total deferred income tax assets		14,041			16,044
Deferred income tax liabilities:
Property and equipment – tax over book depreciation		(26,664	)		(25,859	)
Intangible assets – tax over book amortization		(3,592	)		(3,670	)
Non-U.S. deferred income tax liabilities		(91	)		—
Other		(2,259	)		(897	)
Total deferred income tax liabilities		(32,606	)		(30,426	)
Net deferred income taxes	$	(18,565	)	$	(14,382	)

The Company determined that it is more-likely-than-not that it will not realize the deferred tax assets on certain Canadian subsidiaries and recorded a valuation allowance against the entire related deferred tax assets.

As of December 31, 2016, the Company had no undistributed earnings of our Canadian subsidiaries. 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’s tax return for 2015 is subject to examination by U.S. federal authorities. The Company’s tax returns are subject to examination by various state authorities for the years 2012 through 2015.

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 decrease in prior period tax positions is primarily due to the settlement of an Internal Revenue Service audit for the 2012 through 2014 tax years. The total unrecognized tax benefits is expected to be reduced by less than $0.1 million within the next 12 months due to the lapses in the applicable statutes of limitations. 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)	2016			2015
Balance at beginning of period	$	425		$	507
Gross increases in current period tax positions		100			62
Gross increases in prior period tax positions		—			19
Gross decreases in prior period tax positions		—			(163	)
Reductions in tax positions due to lapse of statutory limitations		(12	)		—
Settlements with taxing authorities		(243	)		—
Balance at end of period		270			425
Accrued interest and penalties at end of period		31			139
Total liability for unrecognized tax benefits	$	301		$	564

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, 2016, 2015 and 2014.