13. Income Taxes

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

	2014			2013			2012
Current:
Federal	$	53,713		$	44,853		$	34,074
State		4,597			4,375			7,928
Deferred:
Federal		(2,863	)		(4,365	)		886
State		3,274			3,654			319
Total provision for income taxes	$	58,721		$	48,517		$	43,207

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:

	2014			2013			2012
Provision computed at federal statutory income tax rate	$	66,797		$	58,024		$	51,201
State and local income taxes, net of federal benefit		5,029			5,698			6,424
Employer tax credits for FICA taxes paid on employee tip income		(9,962	)		(9,635	)		(9,114	)
Other employer tax credits		(3,781	)		(5,927	)		(4,938	)
Other-net		638			357			(366	)
Total provision for income taxes	$	58,721		$	48,517		$	43,207

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

	August 1, 2014		August 2, 2013
Deferred tax assets:
Compensation and employee benefits	$	10,858	$	16,750
Deferred rent		14,900		13,535
Accrued liabilities		13,942		12,766
Insurance reserves		11,944		12,091
Inventory		6,212		5,669
Other		3,172		4,437
Deferred tax assets	$	61,028	$	65,248

Deferred tax liabilities:
Property and equipment	$	88,543	$	94,179
Inventory		13,415		13,700
Other		9,591		9,550
Deferred tax liabilities		111,549		117,429
Net deferred tax liability	$	50,521	$	52,181

The Company believes that adequate amounts of tax, interest and penalties have been provided for potential tax uncertainties; these amounts are included in other long-term liabilities in the Consolidated Balance Sheets. As of August 1, 2014 and August 2, 2013, the Company's gross liability for uncertain tax positions, exclusive of interest and penalties, was $22,832 and $20,972, 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 1, 2014			August 2, 2013			August 3, 2012
Balance at beginning of year	$	20,972		$	18,098		$	14,167
Tax positions related to the current year:
Additions		3,989			3,731			3,326
Reductions		--			--			--
Tax positions related to the prior year:
Additions		1,400			191			2,556
Reductions		(1,630	)		(280	)		(1,043	)
Settlements		(755	)		--			--
Expiration of statute of limitations		(1,144	)		(768	)		(908	)
Balance at end of year	$	22,832		$	20,972		$	18,098

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:

		2014				2013				2012
Uncertain tax positions		$	14,840			$	13,631			$	11,764

The Company had $8,559, $7,869 and $6,605 in interest and penalties accrued as of August 1, 2014, August 2, 2013, and August 3, 2012, respectively.

The Company recognized accrued interest and penalties related to unrecognized tax benefits of $691, $1,264 and $1,225 in its provision for income taxes in August 1, 2014, August 2, 2013 and August 3, 2012, 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 1, 2014 by approximately $2,000 to $4,000 within the next twelve months. At August 1, 2014, the Company was subject to income tax examinations for its U.S. federal income taxes after 2010 and for state and local income taxes generally after 2010.