14. Income Taxes

The components of the provision for income taxes for each of the three years were as follows:

	2013		2012		2011
Current:
Federal	$	44,853	$	34,074	$	17,231
State		4,375		7,928		5,577
Deferred:
Federal		(4,365)		886		9,019
State		3,654		319		(1,344)
Total provision for income taxes	$	48,517	$	43,207	$	30,483

A reconciliation of the Company's provision for income taxes and income taxes based on the statutory U.S. federal rate of 35% was as follows:

	2013		2012		2011
Provision computed at federal statutory income tax rate	$	58,024	$	51,201	$	40,492
State and local income taxes, net of federal benefit		5,698		6,424		3,050
Employer tax credits for FICA taxes paid on employee tip income		(9,635)		(9,114)		(8,351)
Other employer tax credits		(5,927)		(4,938)		(5,098)
Other-net		357		(366)		390
Total provision for income taxes	$	48,517	$	43,207	$	30,483

Significant components of the Company's net deferred tax liability consisted of the following at:

	August 2, 2013		August 3, 2012
Deferred tax assets:
Compensation and employee benefits	$	16,750	$	14,803
Deferred rent		13,535		12,162
Accrued liabilities		12,766		12,988
Insurance reserves		12,091		12,308
Inventory		5,669		5,293
Other		4,437		13,609
Deferred tax assets	$	65,248	$	71,163

Deferred tax liabilities:
Property and equipment	$	94,179	$	96,783
Inventory		13,700		12,956
Other		9,550		9,402
Deferred tax liabilities		117,429		119,141
Net deferred tax liability	$	52,181	$	47,978

The Company provided no valuation allowance against deferred tax assets recorded as of August 2, 2013 and August 3, 2012, as the "more-likely-than-not" valuation method determined all deferred assets to be fully realizable in future taxable periods.

The Company believes that adequate amounts of tax, interest and penalties have been provided for potential tax uncertainties. As of August 2, 2013 and August 3, 2012, the Company's gross liability for uncertain tax positions, exclusive of interest and penalties, was $20,972 and $18,098, respectively. Summarized below is a tabular reconciliation of the beginning and ending balance of the Company's total gross liability for uncertain tax positions exclusive of interest and penalties:

	August 2, 2013		August 3, 2012		July 29, 2011
Balance at beginning of year	$	18,098	$	14,167	$	12,965
Tax positions related to the current year:
Additions		3,731		3,326		2,616
Reductions		--		--		--
Tax positions related to the prior year:
Additions		191		2,556		987
Reductions		(280)		(1,043)		(24)
Settlements		--		--		--
Expiration of statute of limitations		(768)		(908)		(2,377)
Balance at end of year	$	20,972	$	18,098	$	14,167

If the Company were to prevail on all uncertain tax positions, the reversal of this accrual would be a tax benefit to the Company and impact the effective tax rate. The following table highlights the amount of uncertain tax positions, exclusive of interest and penalties, which, if recognized, would affect the effective tax rate for each of the three years:

		2013				2012				2011
Uncertain tax positions		$	13,631			$	11,764			$	9,209

The Company had $7,869, $6,605 and $5,380 in interest and penalties accrued as of August 2, 2013, August 3, 2012 and July 29, 2011, respectively.

The Company recognized accrued interest and penalties related to unrecognized tax benefits of $1,264, $1,225 and $878 in its provision for income taxes in August 2, 2013, August 3, 2012 and July 29, 2011, respectively.

In many cases, the Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. Based on the outcome of these examinations or as a result of the expiration of the statutes of limitations for specific taxing jurisdictions, it is reasonably possible that the related uncertain tax positions taken regarding previously filed tax returns could decrease from those recorded as liabilities for uncertain tax positions in the Company's financial statements at August 2, 2013 by approximately $1,000 to $2,000 within the next twelve months. At August 2, 2013, the Company was subject to income tax examinations for its U.S. federal income taxes after 2009 and for state and local income taxes generally after 2009.