(3) Income Taxes

The components of income tax (benefit) expense are:

	2016			2015			2014
Current:
Federal	$	5,136		$	573		$	(4,256	)
State		(122	)		417			251
Foreign		655			991			934
Deferred:
Federal		(1,345	)		(319	)		3,492
State		1,216			347			(872	)
	$	5,540		$	2,009		$	(451	)

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 35.0% to income before income tax expense as a result of the following:

	2016			2015			2014
Computed tax expense at statutory federal rates	$	6,415		$	3,010		$	1,536
Increase (decrease) in taxes resulting from:
State taxes, net of federal income tax benefit		702			454			(11	)
Domestic production deduction		(1,272	)		(179	)		420
Income tax credits		(335	)		(662	)		(728	)
Foreign tax rate differential		(1,587	)		(1,590	)		(2,159	)
Subpart F income		14			9			338
Equity investment		123			223			10
Stock based compensation		208			244			219
State tax rate change		116			185			(257	)
Tax interest		920			-			-
Other expenses		236			315			181
	$	5,540		$	2,009		$	(451	)

Income before provision for income taxes and losses on equity investment are:

	2016		2015		2014
Domestic	$	12,513	$	1,589	$	(5,196	)
Foreign		6,404		7,373		8,840
	$	18,917	$	8,962	$	3,644

Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2016 and 2015 relate to the following:

	2016		2015
Deferred tax asset
Inventories	$	5,359	$	5,949
State income taxes		213		(215	)
Program accrual		12,318		12,598
Vacation pay accrual		818		796
Accrued bonuses		2,072		543
Bad debt		6		45
Stock compensation		1,614		1,781
NOL carryforward		351		658
Tax credit		14		524
Other		2,707		1,659
Deferred tax asset	$	25,472	$	24,338
Deferred tax liability
Plant and equipment, principally due to differences in depreciation and capitalized interest	$	30,636	$	30,038
Prepaid expenses		1,542		1,157
Deferred tax liability		32,178		31,195
Total net deferred tax liability	$	6,706	$	6,857

The following is a roll-forward of the Company’s total gross unrecognized tax liabilities, not including interest and penalties, for the fiscal years ended December 31, 2016 and 2015:

	2016			2015
Balance at beginning of year	$	2,007		$	1,958
Additions for tax positions related to the current year		65			85
Additions for tax positions related to the prior year		86			86
Deletion for tax positions related to the prior year		(265	)		(122	)
Balance at end of year	$	1,893		$	2,007

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. For the year ended December 31, 2016 and 2015, the Company had recognized approximately $408 and $335, respectively in interest and penalties related to unrecognized tax benefits accrued.

It is expected that the amount of unrecognized tax benefits will change within the next 12 months; however we do not expect the change to have a significant impact on our consolidated financial statements. At this time, an estimate of the range of the reasonable possible outcomes cannot be made.

The Company believes it is more likely than not that the deferred tax assets detailed in the table above will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries are permanently reinvested and, accordingly, no deferred liability for federal and state income taxes has been recorded. The amount of undistributed earnings was $35,586 and $29,774 as of December 31, 2016 and December 31, 2015, respectively. Upon distribution of earnings in the form of dividends or otherwise, the Company would be subject to both federal and state income taxes (less any applicable foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the unrecognized deferred income tax liability is not practical due to the complexities of a hypothetical calculation.

The Company is subject to both U.S. federal income tax and income tax in multiple state jurisdictions on income generated in the United States. Federal income tax returns, of the Company are subject to Internal Revenue Service (“IRS”) examination for the 2013 through 2015 tax years. State income tax returns are subject to examination for the 2012 through 2015 tax years.

The Company currently is undergoing an examination by the IRS for the tax years ended December 31, 2013 and 2014. While the audit is ongoing, the Company has agreed to a proposed adjustment. As a result, the Company has increased deferred tax assets and income taxes payable at December 31, 2015 by $12,598.