Income Taxes

The components of the provision for income taxes are as follows for 2014, 2013 and 2012 (in thousands):



	2014		2013		2012
Current tax provision:
Federal	$	—	$	—	$	49
State	792		561		559
	792		561		608
Deferred tax provision:
Federal	5,662		3,923		2,591
State	668		283		16
	6,330		4,206		2,607
Total provision for income taxes	$	7,122	$	4,767	$	3,215

The reconciliation of income tax provision that would result from applying the federal statutory rate to pre-tax income as shown in the accompanying consolidated statements of income is as follows for 2014, 2013 and 2012 (in thousands):



	2014			2013			2012
Federal income expense at federal rate	$	6,299		$	3,887		$	2,848
State income tax, net of related federal income tax benefit	972			653			420
Permanent differences	170			374			83
Foreign rate differential	6			26			106
Tax credits	(241		)	(149		)	—
Other items, net	(84		)	(24		)	(242		)
Provision for income taxes	$	7,122		$	4,767		$	3,215
Effective income tax rate	38.4		%	41.7		%	38.4		%

In 2014, 2013, and 2012 the Company recognized tax benefits on option exercises at fair value in excess of those utilized to record stock-based compensation for book purposes, totaling $253,000, $201,000, and $27,000, respectively, as a credit to additional paid-in capital.

The company's total deferred tax assets and liabilities are as follows (in thousands):



	2014		2013
Deferred tax assets	23,001		20,605
Deferred tax liabilities	(31,216	)	(22,881	)
Total deferred tax liabilities, net	(8,215	)	(2,276	)

8. Income Taxes (continued)

Deferred income taxes arise because of the differences in the book and tax bases of certain assets and liabilities. Deferred income tax liabilities and assets consist of the following (in thousands):



	2014			2013
Noncurrent deferred tax assets (liabilities):
Loss carry forwards	$	743		$	2,745
Deferred rent and franchise revenue	14,454			11,850
Property, equipment and intangible assets	(26,514		)	(19,342		)
Stock-based compensation	2,847			2,442
Tax credit carry forwards	897			565
Other	1,061			594
Total noncurrent net deferred tax assets (liabilities)	(6,512		)	(1,146		)
Current deferred tax assets (liabilities):
Inventory smallwares	(2,405		)	(1,737		)
Other	702			607
Total current deferred tax liabilities	(1,703		)	(1,130		)
Net deferred tax assets (liability)	$	(8,215	)	$	(2,276	)

At December 30, 2014 and December 31, 2013, net operating loss carry forwards for federal income tax purposes of approximately $22.9 million and $22.7 million, respectively, were available to offset future taxable income through the year 2034 and 2033, respectively. The net operating loss carry forwards are primarily composed of excess tax deductions for equity compensation. Utilization of the net operating losses is subject to an annual limitation resulting from a change in control in 2007 and a change of control in 2010, pursuant to the change in ownership provisions of Section 382 of the Internal Revenue Code and similar provisions of state law. As a result of certain realization requirements of ASC 718, the deferred tax assets shown above include only realized tax deductions related to equity compensation equal to the compensation recognized for financial reporting during the years ended December 30, 2014 and December 31, 2013. Equity will be increased by up to $7.0 million if and when the net operating loss is ultimately realized.

Uncertain tax positions are recognized if it is more likely than not that the Company will be able to sustain the tax position taken, and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon resolution of the benefit. The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. There were no uncertain tax positions for the years ended December 30, 2014 or December 31, 2013. The only periods subject to examination for the Company's federal and state returns are 2010 through 2013.