7. Income Taxes

The components of loss before income taxes are as follows (in thousands):


	Fiscal Year Ended June 30,
	2015			2014			2013
US	$	(18,917	)	$	(109,257	)	$	(89,087	)
Foreign		(1,335	)		(938	)		(4,886	)

	$	(20,252	)	$	(110,195	)	$	(93,973	)

The components of the (benefit from) provision for taxes are as follows (in thousands):


	Fiscal Year Ended June 30,
	2015			2014			2013
Current
Federal	$	(2,140	)	$	(8,885	)	$	3,388
State		(149	)		(374	)		577
Foreign		129			361			365

Total current (benefit from) provision for income taxes	$	(2,160	)	$	(8,898	)	$	4,330
Deferred
Federal	$	1,954		$	42,842		$	(29,763	)
State		—			2,265			(1,249	)
Foreign		(38	)		—			81

Total deferred provision for (benefit from) income taxes		1,916			45,107			(30,931	)

(Benefit from) provision for income taxes	$	(244	)	$	36,209		$	(26,601	)

The reconciliation between the statutory federal income tax and the Company’s effective tax rates as a percentage of income before income taxes is as follows:


	Fiscal Year Ended June 30,
	2015			2014			2013
Federal tax rate		34.0	%		34.0	%		35.0	%
States taxes, net of federal benefit		5.8	%		2.4	%		0.9	%
Foreign rate differential		(1.1	)%		(0.6	)%		(1.1	)%
Stock-based compensation expense		(13.3	)%		(3.6	)%		(1.7	)%
Change in valuation allowance		(25.0	)%		(60.5	)%		(1.0	)%
Impairment of goodwill		—			(4.3	)%		(4.6	)%
Research and development credits		1.6	%		0.3	%		—
Other		(0.8	)%		(0.7	)%		0.8	%

Effective income tax rate		1.2	%		(32.8	)%		28.3	%

The components of the current and long-term deferred tax (liabilities) assets, net are as follows (in thousands):


	Fiscal Year Ended June 30,
	2015			2014
Current:
Reserves and accruals	$	3,091		$	2,686
Stock options		1,942			2,035
Other		74			91

Total current deferred tax assets		5,107			4,812
Valuation allowance - ST		(4,940	)		(4,589	)

Current deferred tax assets, net	$	166		$	223

Noncurrent:
Reserves and accruals	$	1,134		$	1,309
Stock options		5,825			6,106
Intangible assets		53,261			57,083
Net operating loss		5,717			255
Fixed assets		(702	)		(1,193	)
Tax Credits		2,785			1,568
Other		93			167

Total noncurrent deferred tax assets		68,113			65,295
Valuation allowance - LT		(68,301	)		(63,583	)

Noncurrent deferred tax (liabilities) assets, net	$	(188	)	$	1,712

Total deferred tax (liabilities) assets, net	$	(22	)	$	1,935

The Company recorded a valuation allowance against the majority of the Company’s deferred tax assets at the end of fiscal year 2014 due to the significant negative evidence that the near term realization of certain assets were deemed unlikely. The Company regularly assesses the continuing need for a valuation allowance against its deferred tax assets. Significant judgment is required to determine whether a valuation allowance continues to be necessary and the amount of such valuation allowance, if appropriate. The Company considers all available evidence, both positive and negative to determine, based on the weight of available evidence, whether it is more likely than not that some or all of the deferred tax assets will not be realized. In evaluating the continued need for a valuation allowance the Company considers, among other things, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, and the duration of statutory carryforward periods. As of June 30, 2015, the Company believes it is not more likely than not that the net deferred tax assets will be fully realizable and therefore continues to maintain a full valuation allowance against its deferred tax assets.

As of June 30, 2015, the Company had a federal operating loss carryforward of approximately $14.1 million. As of June 30, 2015, the Company’s state operating loss carryforward was approximately $13.8 million. Included in the federal, California and other state net operating loss carryovers above was $0.1 million, $0.2 million and $0.3 million, respectively, related to stock option windfall deductions which, when realized will be credited to equity. The federal and state net operating loss carryforwards may be subject to various limitations under the Internal Revenue Code and applicable state tax law. The federal and state net operating losses, if not used, will begin to expire on June 30, 2035 and June 30, 2034, respectively. The operating loss carryforward in Brazil is approximately $0.8 million and does not have an expiration date. The operating loss carryforward in India is approximately $2.5 million which will begin to expire on June 30, 2020. The Company has federal and California research and development tax credit carry-forwards of approximately $1.0 million and $3.8 million, respectively, to offset future taxable income. The federal research and development tax credits, if not used, will begin to expire on June 30, 2033, while the state tax credit carry-forwards do not have an expiration date and may be carried forward indefinitely.

United States federal income taxes have not been provided for the $2.0 million of cumulative undistributed earnings of the Company’s foreign subsidiaries as of June 30, 2015. The Company’s present intention is that such undistributed earnings be permanently reinvested offshore, with the exception of the undistributed earnings of its Canadian subsidiary. The Company would be subject to additional United States taxes if these earnings were repatriated. The amount of the unrecognized deferred income tax liability related to these earnings is not material to the financial statements.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):


	Fiscal Year
	2015			2014			2013
Balance at the beginning of the year	$	3,077		$	2,692		$	2,436
Gross increases - current period tax positions		337			379			389
Gross increases - prior period tax positions		115			323			132
Gross decreases - prior period tax positions		(44	)		—			—
Reductions as a result of lapsed statute of limitations		(222	)		(317	)		(265	)

Balance at the end of the year	$	3,263		$	3,077		$	2,692

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the Company’s benefit from (provision for) income taxes. As of June 30, 2015, the Company has accrued $1.1 million for interest and penalties related to the unrecognized tax benefits. The balance of unrecognized tax benefits and the related interest and penalties is recorded as a noncurrent liability on the Company’s consolidated balance sheet.

As of June 30, 2015, unrecognized tax benefits of $2.0 million, if recognized, would affect the Company’s effective tax rate. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company is no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations by tax authorities for years before 2010. The Company files income tax returns in the United States, various U.S. states and certain foreign jurisdictions. As of June 30, 2015, the tax years 2010 through 2014 remain open in the U.S., the tax years 2010 through 2014 remain open in the various state jurisdictions, and the tax years 2012 through 2014 remain open in various foreign jurisdictions.