Income Taxes

The components of the provision for income taxes are as follows for the fiscal periods ended (in thousands):



	2016			2015		2014
Current:
Federal	$	184,636		$	164,165	$	187,735
State	31,426			27,076		30,340
	216,062			191,241		218,075
Deferred:
Federal	(38,138		)	8,198		(5,740		)
State	(6,898		)	1,045		(519		)
	(45,036		)	9,243		(6,259		)
Total provision	$	171,026		$	200,484	$	211,816

The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the following periods:



	2016		2015		2014
Federal statutory rate	35.0	%	35.0	%	35.0	%
State tax, net of federal benefit	3.3	%	3.5	%	3.1	%
Valuation allowance	(0.1	)%	(0.1	)%	—	%
Other permanent items	(0.9	)%	(0.6	)%	—	%
Effective income tax rate	37.3	%	37.8	%	38.1	%

Components of deferred tax assets (liabilities) consist of the following as of the fiscal periods ended (in thousands):



	2016			2015
Inventory	$	69,784		$	45,442
Employee benefits	42,730			37,295
Deferred rent	41,684			36,485
Stock-based compensation	26,697			26,843
Gift cards	19,077			15,884
Deferred revenue currently taxable	12,485			4,957
Store closing expense	6,852			4,569
Other accrued expenses not currently deductible for tax purposes	6,577			9,532
Net operating loss carryforward	5,901			—
Non income-based tax reserves	5,319			5,274
Capital loss carryforward	4,717			5,304
Uncertain income tax positions	3,597			4,253
Insurance	2,674			2,280
Other	139			179
Valuation allowance	(4,717		)	(5,304		)
Total deferred tax assets	243,516			192,993
Property and equipment	(146,925		)	(152,287		)
Inventory valuation	(42,354		)	(35,095		)
Intangibles	(8,310		)	(5,900		)
Total deferred tax liabilities	(197,589		)	(193,282		)
Net deferred tax asset (liability)	$	45,927		$	(289	)

The deferred tax asset from net operating loss carryforwards of $5.9 million represents approximately $14.5 million of federal net operating losses which expire in 2030 and $16.0 million of state net operating losses which expire in 2034. In 2016, the $45.9 million net deferred tax asset is included in its entirety within other long-term assets on the Consolidated Balance Sheet. In 2015, of the $0.3 million net deferred tax liability, $6.2 million was included within other long-term assets and $6.5 million was included within long-term liabilities.

As of January 28, 2017, deferred income taxes have not been provided on accumulated, but undistributed, earnings of $46.7 million from the Company's international subsidiaries. It is the Company's intention to permanently reinvest these earnings outside the United States. The amount of the unrecognized tax liability from the undistributed earnings as of January 28, 2017 is estimated to be $16.1 million.

As of January 28, 2017, the total liability for uncertain tax positions, including related interest and penalties, was approximately $10.8 million.

The following table represents a reconciliation of the Company's total balance of unrecognized tax benefits, excluding interest and penalties (in thousands):



	2016			2015			2014
Beginning of fiscal year	$	9,784		$	8,376		$	7,507
Increases as a result of tax positions taken in a prior period	—			1,101			124
Decreases as a result of tax positions taken in a prior period	(831		)	—			—
Increases as a result of tax positions taken in the current period	2,067			1,193			1,057
Decreases as a result of settlements during the current period	(2,534		)	(63		)	(312		)
Reductions as a result of a lapse of statute of limitations during the current period	(193		)	(823		)	—
End of fiscal year	$	8,293		$	9,784		$	8,376

The balance at January 28, 2017 includes $5.4 million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties from unrecognized tax benefits in income tax expense.

As of January 28, 2017, the liability for uncertain tax positions includes $2.5 million for the accrual of interest and penalties. During fiscal 2016, 2015 and 2014, the Company recorded $0.3 million, $1.2 million and $0.3 million, respectively, for the accrual of interest and penalties in the Consolidated Statements of Income. The Company has federal, state and local examinations currently ongoing. It is possible that these examinations may be resolved within 12 months. Due to the potential for resolution of these examinations, and the expiration of various statutes of limitation, it is reasonably possible that $3.3 million of the Company's gross unrecognized tax benefits and interest at January 28, 2017 could be recognized within the next 12 months. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2017.

The Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP"). As part of the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed examinations of 2015 and all prior tax years. The Company is no longer subject to examination in any of its major state jurisdictions for years prior to 2009.