Entity information:
Income tax provision

Income before income taxes was comprised of the following for the years ended December 31:
(in thousands)
 
2017
 
2016
 
2015
United States
 
$
299,424

 
$
325,396

 
$
312,157

Foreign
 
13,403

 
14,990

 
15,790

Income before income taxes
 
$
312,827

 
$
340,386

 
$
327,947


The components of the income tax provision were as follows for the years ended December 31:
(in thousands)
 
2017
 
2016
 
2015
Current tax provision:
 
 
 
 
 
 
Federal
 
$
104,079

 
$
93,261

 
$
98,000

State
 
12,996

 
12,006

 
10,632

Foreign
 
4,774

 
3,851

 
3,942

Total current tax provision
 
121,849

 
109,118

 
112,574

Deferred tax provision:
 
 
 
 
 
 
Federal
 
(37,471
)
 
1,752

 
(3,591
)
State
 
(491
)
 
462

 
354

Foreign
 
(1,215
)
 
(328
)
 
(19
)
Total deferred tax provision
 
(39,177
)
 
1,886

 
(3,256
)
Income tax provision
 
$
82,672

 
$
111,004

 
$
109,318



The effective tax rate on pre-tax income reconciles to the United States federal statutory tax rate of 35% for the years ended December 31 as follows:
 
 
2017
 
2016
 
2015
Income tax at federal statutory rate
 
35.0
%
 
35.0
%
 
35.0
%
State income tax expense, net of federal income tax benefit
 
2.7
%
 
2.4
%
 
2.3
%
Goodwill impairment charge
 
1.5
%
 
—

 
—

Impact of Tax Cuts and Jobs Act
 
(6.6
%)
 
—

 
—

Qualified production activities deduction
 
(3.2
%)
 
(2.8
%)
 
(2.9
%)
Net tax benefit of share-based compensation
 
(1.6
%)
 
(1.2
%)
 
—

Other
 
(1.4
%)
 
(0.8
%)
 
(1.1
%)
Effective tax rate
 
26.4
%
 
32.6
%
 
33.3
%

On December 22, 2017, United States tax reform was signed into law as the Tax Cuts and Jobs Act (the 2017 Act). This legislation included a broad range of tax reforms, including changes to corporate tax rates, business deductions and international tax provisions. The tax effects of changes in tax laws or rates must be recognized in the period in which the law is enacted. As such, this legislation resulted in a net benefit of approximately $20,500 to our 2017 income tax provision. This amount included the net tax benefit from the remeasurement of deferred income taxes to the new federal statutory tax rate of 21%, which is effective for us on January 1, 2018, and revised state income tax rates for those states we expect to follow the provisions of the 2017 Act, partially offset by the establishment of a liability for toll charges related to undistributed foreign earnings and profits.

Reasonable estimates were used in determining many components of the impact of the 2017 Act, including our 2017 deferred activity and the amount of post-1986 foreign deferred earnings subject to the toll charge. We are still analyzing certain aspects of the 2017 Act and refining our calculations, which could potentially affect the measurement of our deferred tax balances and the amount of the toll charge liability, and ultimately cause us to revise our initial estimates in future periods. In addition, changes in interpretations, assumptions and guidance regarding the new tax legislation, as well as the potential for technical corrections to the 2017 Act, could have a material impact on our effective tax rate in future periods.

In order to complete our accounting for the 2017 Act, which we expect to finalize by the fourth quarter of 2018, the following specific items need to be completed or addressed:

•
Issuance of state-by-state guidance regarding conformity with or decoupling from the 2017 Act.
•
Finalize the calculation of post-1986 foreign deferred earnings, which are subject to the toll charge, and determine our ability to beneficially claim a foreign tax credit resulting from the income inclusion.
•
Where pertinent, adjust to clarifications and guidance regarding other aspects of the 2017 Act, including those related to executive compensation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding accrued interest and penalties and the federal benefit of deductible state income tax, is as follows:
(in thousands)
 
2017
 
2016
 
2015
Balance, beginning of year
 
$
7,373

 
$
5,743

 
$
5,272

Additions for tax positions of current year
 
378

 
521

 
625

Additions for tax positions of prior years
 
659

 
1,428

 
802

Reductions for tax positions of prior years
 
(4,389
)
 
(177
)
 
(225
)
Settlements
 
—

 
—

 
(541
)
Lapse of statutes of limitations
 
(226
)
 
(142
)
 
(190
)
Balance, end of year
 
$
3,795

 
$
7,373

 
$
5,743



If the unrecognized tax benefits as of December 31, 2017 were recognized in our consolidated financial statements, income tax expense would decrease $3,795. Accruals for interest and penalties, excluding the tax benefits of deductible interest, were $1,046 as of December 31, 2017 and $1,330 as of December 31, 2016. Our income tax provision included a reduction for interest and penalties of $284 in 2017 and expense for interest and penalties of $179 in 2016 and $177 in 2015. Within the next 12 months, it is reasonably possible that our unrecognized tax benefits will change in the range of a decrease of $1,000 to an increase of $1,200 as we attempt to resolve certain federal and state tax matters or as federal and state statutes of limitations expire. Due to the nature of the underlying liabilities and the extended time frame often needed to resolve income tax uncertainties, we cannot provide reliable estimates of the amount or timing of cash payments that may be required to settle these liabilities.

The statute of limitations for federal tax assessments for 2013 and prior years has expired. Audits of our federal income tax returns for 2013 through 2015 have been completed by the Internal Revenue Service (IRS). Our 2016 return and our 2017 return, when filed, are subject to IRS examination. In general, income tax returns for the years 2013 through 2017 remain subject to examination by foreign, state and city tax jurisdictions. In the event that we have determined not to file income tax returns with a particular state or city, all years remain subject to examination by the tax jurisdiction.

The ultimate outcome of tax matters may differ from our estimates and assumptions. Unfavorable settlement of any particular issue would require the use of cash and could result in increased income tax expense. Favorable resolution would result in reduced income tax expense.

Tax-effected temporary differences that gave rise to deferred tax assets and liabilities as of December 31 were as follows:
 
 
2017
 
2016
(in thousands)
 
Deferred tax assets
 
Deferred tax liabilities
 
Deferred tax assets
 
Deferred tax liabilities
Goodwill
 
$
—

 
$
45,317

 
$
—

 
$
66,905

Property, plant and equipment
 
—

 
8,122

 
762

 
—

Intangible assets
 
—

 
7,490

 
—

 
30,983

Prepaid assets
 
—

 
3,137

 
—

 
4,692

Installment sales treatment of notes receivable
 
—

 
2,450

 
—

 
—

Deferred advertising costs
 
—

 
1,920

 
—

 
3,461

Early extinguishment of debt
 
—

 
520

 
—

 
1,563

Employee benefit plans
 
999

 
—

 
9,677

 
—

Reserves and accruals
 
6,151

 
—

 
7,964

 
—

Net operating loss, capital loss and tax credit carryforwards
 
11,802

 
—

 
5,152

 
—

Inventories
 
2,110

 
—

 
3,151

 
—

Federal benefit of state uncertain tax positions
 
956

 
—

 
2,677

 
—

All other
 
1,940

 
2,599

 
3,154

 
5,955

Total deferred taxes
 
23,958

 
71,555

 
32,537

 
113,559

Valuation allowances
 
(1,518
)
 
—

 
(2,545
)
 
—

Net deferred taxes
 
$
22,440

 
$
71,555

 
$
29,992

 
$
113,559



The valuation allowances as of December 31, 2017 and December 31, 2016 related primarily to capital loss carryforwards in Canada and net operating loss carryforwards in various state jurisdictions that we do not currently expect to fully realize. The provision for income taxes included benefits of $1,015 for 2017 and $302 for 2016 and charges of $140 for 2015 related to changes in the valuation allowances. The remainder of the change in the valuation allowances was attributable to foreign currency translation.

As of December 31, 2017, we intend to indefinitely reinvest the undistributed earnings of our subsidiaries located outside of the United States and, therefore, no deferred income taxes have been recognized for the tax effects of repatriation. After enactment of the 2017 Act, the tax effects would generally be limited to foreign withholding taxes on any distributions. As of December 31, 2017, the amount of cash and cash equivalents held by our foreign subsidiaries was $40,022, primarily in Canada.

As of December 31, 2017, we had the following net operating loss, capital loss and tax credit carryforwards:

•
State net operating loss carryforwards of $52,373 that expire at various dates up to 2037;
•
Foreign capital loss and net operating loss carryforwards of $9,052 that do not expire;
•
Foreign research tax credit and net operating loss carryforwards of $8,571 that expire at various dates up to 2037; and
•
Federal net operating loss and capital loss carryforwards of $3,385 that expire at various dates between 2019 and 2029.