Income Taxes

The components of income before income taxes are as follows:



	2016		2015		2014
Domestic	$	110,526	$	81,785	$	85,988
Foreign	60,474		90,681		85,405
	$	171,000	$	172,466	$	171,393

The income tax provision (benefit) consists of the following:



	2016			2015			2014
Current:
Federal	$	47,655		$	24,838		$	29,933
State and local	6,063			4,136			4,244
Foreign	3,270			13,960			15,167
	56,988			42,934			49,344
Deferred:
Federal	(7,050		)	16,976			10,229
State and local	153			1,961			(2,014		)
Foreign	(365		)	(3,060		)	1,205
	(7,262		)	15,877			9,420
	$	49,726		$	58,811		$	58,764

Note M - Income Taxes (continued)

A reconciliation between taxes computed at the federal statutory rate and the effective tax rate is as follows:



	December 31,
	2016		2015		2014
Income taxes at federal statutory rate	35.0	%	35.0	%	35.0	%
Effects of foreign operations	(5.3	)	(3.6	)	(2.7	)
Stock-based compensation	(3.0	)	—		—
State and local income taxes - net of federal income tax benefit	2.0		1.7		1.1
Nondeductible items	0.2		0.1		0.2
Valuation allowance (reversal)	—		—		(0.1	)
Other	0.2		0.9		0.8
Effective rate	29.1	%	34.1	%	34.3	%

The Company applies the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

In accordance with accounting guidance, the Company has opted to classify interest and penalties that would accrue according to the provisions of relevant tax law as income tax expense on the Consolidated Statements of Income. The Company determines the amount of interest expense to be recognized by applying the applicable statutory rate of interest to the difference between the tax position recognized and the amount previously taken or expected to be taken on a tax return. The Company's tax years 2013 through 2016 remain open to examination by most taxing authorities. During 2016, the U.S. Internal Revenue Service ("IRS") commenced an audit of the Company's 2014 U.S. income tax return. As of December 31, 2016 the audit remains open and the Company is working with the IRS on open matters. Management believes that adequate provisions have been made for any adjustments that may result from the audit. The Company does not have any material unrecognized tax benefits recorded as of December 31, 2016 and 2015.

Note M - Income Taxes (continued)

The components of deferred tax assets and liabilities are as follows:



	December 31,
	2016			2015
Current deferred tax assets (liabilities):
Receivable allowances	$	8,800		$	7,932
Inventory	2,202			2,237
Unrealized loss	—			1,096
Accrued expenses	751			796
Other	2,232			2,331
Gross current deferred tax assets	13,985			14,392

Non-current deferred tax assets (liabilities)
Depreciation and amortization	(19,264		)	(16,045		)
Deferred compensation	17,569			14,936
Unremitted earnings of foreign subsidiaries	(31,262		)	(39,494		)
Deferred rent	5,327			4,585
Amortization of goodwill	(6,640		)	(3,749		)
Unrealized loss	177			(80		)
Net carryforwards	1,172			—
Other	1,283			437
	(31,638		)	(39,410		)
Net deferred tax (liabilities)	$	(17,653	)	$	(25,018	)

The Company's consolidated financial statements provide for any related tax liability on amounts that may be repatriated from foreign operations, aside from undistributed earnings of certain of the Company's foreign subsidiaries that are intended to be indefinitely reinvested in operations outside the U.S. The deferred tax liability of $31,262 and $39,494 for the years ended December 31, 2016 and 2015, respectively, reflects the amounts that may be repatriated from foreign operations. The total amount of indefinitely reinvested earnings of foreign subsidiaries as of December 31, 2016 and 2015 was $134,249 and $85,147, respectively. Accordingly, no provision has been made for United States income taxes that may become payable if those undistributed earnings of foreign subsidiaries are paid as dividends. If such amounts were not indefinitely reinvested, the Company would incur approximately $26,615 in taxes that were not previously provided for in our consolidated statements of income.