INCOME TAXES

Income taxes consist of the following in each fiscal year (in thousands):



	2015			2014			2013
Current:
Federal	$	59,362		$	43,864		$	51,367
State	9,598			3,770			7,583
	68,960			47,634			58,950
Deferred:
Federal	(2,018		)	3,700			(16,897		)
State	(1,173		)	452			(1,707		)
	(3,191		)	4,152			(18,604		)
Income tax expense from continuing operations	$	65,769		$	51,786		$	40,346

Income tax benefit from discontinued operations	$	(2,410	)	$	(3,629	)	$	(19,566	)

A reconciliation of the federal statutory income tax rate to our effective tax rate for continuing operations is as follows:



	2015		2014		2013
Computed at federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	3.7		3.3		3.4
Benefit of jobs tax credits, net of valuation allowance	(1.1	)	(1.2	)	(1.9	)
Expense (benefit) related to COLIs	0.3		(1.6	)	(2.9	)
Other, net	(1.0	)	(0.2	)	(0.8	)
	36.9	%	35.3	%	32.8	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each year-end are presented below (in thousands):



	2015			2014
Deferred tax assets:
Accrued pension and postretirement benefits	$	92,456		$	77,170
Accrued insurance	13,245			12,874
Accrued incentive compensation	6,412			3,090
Accrued vacation pay expense	2,193			2,132
Deferred income	1,417			1,436
Impairment	23,982			25,391
Lease commitments related to closed or refranchised locations	11,471			12,686
Other reserves and allowances	1,584			1,303
Tax loss and tax credit carryforwards	14,081			10,705
Leasing transactions	11,442			7,201
Share-based compensation	9,331			9,416
Other, net	12,238			1,418
Total gross deferred tax assets	199,852			164,822
Valuation allowance	(11,563		)	(8,624		)
Total net deferred tax assets	188,289			156,198
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation	(38,403		)	(38,362		)
Intangible assets	(30,132		)	(28,149		)
Other	(1,568		)	(2,069		)
Total gross deferred tax liabilities	(70,103		)	(68,580		)
Net deferred tax assets	$	118,186		$	87,618

Deferred tax assets at September 27, 2015 include state net operating loss carry-forwards of approximately $76.2 million expiring at various times between 2017 and 2035. At September 27, 2015 and September 28, 2014, we recorded a valuation allowance related to losses and state tax credits of $11.6 million and $8.6 million, respectively. The current year change in the valuation allowance of $3.0 million relates primarily to increases in valuation allowance on state net operating losses and state tax credits. We believe that it is more likely than not that these loss and credit carry-forwards will not be realized and that the remaining deferred tax assets will be realized through future taxable income or alternative tax strategies.

Our gross unrecognized tax benefits associated with uncertain income tax positions decreased during fiscal 2015 and 2014 based on the final assessment of a state income tax audit. A reconciliation of the beginning and ending amounts of unrecognized tax benefits follows (in thousands):



	2015			2014
Balance beginning of year	$	374		$	769
Change related to tax positions	(374		)	(395		)
Balance at end of year	$	—		$	374

From time to time, we may take positions for filing our tax returns which may differ from the treatment of the same item for financial reporting purposes. The ultimate outcome of these items will not be known until the Internal Revenue Service or state has completed its examination or until the statute of limitations has expired.

At September 27, 2015, the Company no longer has any gross unrecognized tax benefits associated with uncertain income tax positions. During the year, the Company concluded an audit regarding a specific claim with California. The conclusion of this audit eliminated our unrecognized tax benefits associated with uncertain income tax positions.

The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal years 2012 and forward. The Company’s federal statute of limitations for fiscal years 2009 and 2011 were extended and remain open. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for fiscal years 2010 and 2011, respectively, and forward.