The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2018, 2017 and 2016 as determined in accordance with ASC 740,

Income Taxes

, are as follows:

	Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	15,805		$	19,007		$	14,515
State and local		3,202			2,708			1,425
Foreign		1,482			440			567
	$	20,489		$	22,155		$	16,507
Deferred:
Federal	$	(5,318	)	$	7,947		$	10,629
State and local		(1,077	)		1,105			2,296
Foreign		312			(214	)		(25	)
	$	(6,083	)	$	8,838		$	12,900
Income tax expense	$	14,406		$	30,993		$	29,407

	December 31,
	2018			2017			2016
Federal statutory rate		21.0	%		35.0	%		35.0	%
Change in valuation allowance —Foreign		6.9	%		9.2	%		8.2	%
Non-deductible acquisition-related costs		3.0	%		2.7	%		—
Blended state income tax rate, net of federal benefit		2.8	%		3.8	%		4.2	%
Change in valuation allowance — Capital losses		1.6	%		—			—
Gain on revaluation of deferred consideration (1)		(5.0	%)		—			—
Foreign operations		(2.1	%)		—			—
Stock-based compensation tax (windfalls)/shortfalls		(1.1	%)		1.8	%		—
Re-measurement of net deferred tax assets—Rate change		—			0.8	%		—
Acquisition expense		—			—			4.1	%
Goodwill impairment		—			—			1.2	%
Other differences, net		1.1	%		—			0.2	%
Effective rate		28.2	%		53.3	%		52.9	%

	December 31,
	2018			2017
Deferred tax assets:
NOLs—Foreign	$	6,605		$	3,841
Stock-based compensation		2,673			1,474
Accrued expenses		2,699			526
Goodwill and intangible assets		1,841			—
Deferred rent liability		1,184			1,257
Capital losses		794			—
NOLs—U.S.		762			909
Other		40			416
Deferred tax assets		16,598			8,423
Deferred tax liabilities:
Fixed assets and prepaid assets		1,433			1,498
Unrealized gains		724			1,646
Goodwill and intangible assets		—			388
Deferred tax liabilities		2,157			3,532
Total deferred tax assets less deferred tax liabilities		14,441			4,891
Less: valuation allowance		(7,399	)		(3,841	)
Deferred tax assets, net	$	7,042		$	1,050

The Company’s pre-tax federal net operating losses for tax purposes (“NOLs”) at December 31, 2018 were $3,147, which expire in 2024. The net operating loss carryforwards have been reduced by the impact of annual limitations described in the Internal Revenue Code Section 382 that arose as a result of an ownership change.

During the year ended December 31, 2018, the Company recognized a pre-tax capital loss of $3,278 upon the expiration of its option to purchase the remaining equity interests in AdvisorEngine (Note 9). The Company established a full valuation allowance related to this capital loss as it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized.

Certain of the Company’s European subsidiaries and its Canadian subsidiary generated NOLs outside the U.S. These tax effected NOLs were $6,605, $3,841 and $4,551 at December 31, 2018, 2017, and 2016, respectively. The Company established a full valuation allowance related to these NOLs as it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Approximately $3,715 of these NOLs at December 31, 2018 expire between the years 2036 and 2038. The remainder is carried forward indefinitely.

Tax positions are evaluated utilizing a two-step process. The Company first determines whether any of its tax positions are more-likely-than-not to be sustained upon examination, based solely on the technical merits of the position. Once it is determined that a position meets this recognition threshold, the position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

In connection with the ETFS Acquisition, the Company accrued a liability of £22,118 ($31,317) for uncertain tax positions and £5,065 ($7,171) for interest and penalties at the acquisition date.

	Total			Unrecognized Tax Benefits			Interest and Penalties
Balance on January 1, 2018	$	—		$	—		$	—
Accrued in connection with the ETFS Acquisition		38,488			31,317			7,171
Increases		346			—			346
Foreign currency translation (1)		(3,958	)		(3,216	)		(742	)
Balance at December 31, 2018	$	34,876		$	28,101		$	6,775

The Company also recorded an offsetting indemnification asset provided by ETFS Capital as part of its agreement to indemnify the Company for any potential claims, for which an amount is being held in escrow. ETFS Capital has also agreed to provide additional collateral by maintaining a minimum working capital balance up to a stipulated amount. The gross unrecognized tax benefits and interest and penalties totaling $34,876 at December 31, 2018 are included in other non-current liabilities on the Consolidated Balance Sheet. It is expected that the amount of unrecognized tax benefits will change in the next 12 months, however, the Company does not expect the change to have a material impact on its consolidated financial statements.

At December 31, 2018, there were $28,101 of

unrecognized tax benefits that, if recognized, would impact the effective tax rate. The recognition of any unrecognized tax benefits would result in an equal and offsetting adjustment to the indemnification asset which would be recorded in income before taxes due to the indemnity for any potential claims.

The Company is subject to U.S. federal income tax as well as income tax of multiple state, local and certain foreign jurisdictions. The tax return for the year ended December 31, 2016 of ManJer, the Company’s Jersey-based subsidiary, is currently under review by the relevant tax authority. The Company is indemnified by ETFS Capital for any potential exposure.

The Company is not currently under audit in any other income tax jurisdictions. As of December 31, 2018, with few exceptions, the Company was no longer subject to income tax examinations by any taxing authority for years before 2014.

The Company recognizes deferred tax liabilities for withholding taxes that may become payable, where applicable, upon the distribution of earnings and profits from foreign subsidiaries unless considered essentially permanent in duration. As of December 31, 2018, the Company considers all undistributed foreign earnings and profits to be essentially permanent in duration.