6.	Income Taxes

Income before income taxes by source consists of the following amounts:


	Year ended May 31
(in thousands)	2017		2016		2015
U.S.	$	55,171	$	50,662	$	45,156
Foreign		11,502		4,851		6,920

	$	66,673	$	55,513	$	52,076

The provision for income taxes consisted of the following:


	Year ended May 31
(in thousands)	2017			2016		2015
Current:
U.S. Taxes	$	20,259		$	14,630	$	15,269
Foreign		2,514			1,756		1,364
Deferred		(73	)		2,589		1,867

	$	22,700		$	18,975	$	18,500

The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows:


	Year ended May 31
(in thousands)	2017			2016			2015
Tax at U.S. statutory rate	$	23,336		$	19,429		$	18,227
Section 199 domestic production deduction		(1,057	)		(1,143	)		(1,067	)
Foreign rate differential		(1,247	)		(699	)		(949	)
Subpart F income		996			1,049			1,396
Tax credits and other		(300	)		337			39
Provision for state income taxes, net of federal benefit		972			779			854
Amended U.S. Federal tax returns FY12, FY13 & FY14		—			(777	)		—

	$	22,700		$	18,975		$	18,500

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax liabilities and assets are as follows:


	Year ended May 31
(in thousands)	2017			2016
Deferred income tax liabilities
Indefinite and long-lived assets	$	(23,177	)	$	(19,296	)
Prepaid expenses		(640	)		(824	)
Brazil valuation allowance		—			(542	)

		(23,817	)		(20,662	)
Deferred income tax assets
Stock Options		2,604			2,786
Inventories and accounts receivable		2,603			2,076
Tax loss carryforwards		436			813
Accrued expenses and other		1,126			229

		6,769			5,904

Net deferred income tax liabilities	$	(17,048	)	$	(14,758	)

The Company had no accrual for unrecognized tax benefits at both May 31, 2017 and 2016. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, such accruals will be reflected within income tax accounts. The Company is under audit by the Internal Revenue Service for tax years 2014-2016.