INCOME TAXES

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



	2016			2015			2014
Current:
Federal	$	32,276		$	59,362		$	43,864
State	5,315			9,598			3,770
	37,591			68,960			47,634
Deferred:
Federal	29,975			(2,018		)	3,700
State	4,998			(1,173		)	452
	34,973			(3,191		)	4,152
Income tax expense from continuing operations	$	72,564		$	65,769		$	51,786

Income tax benefit from discontinued operations	$	(1,365	)	$	(2,410	)	$	(3,629	)

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



	2016		2015		2014
Computed at federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	3.7		3.7		3.3
Benefit of jobs tax credits, net of valuation allowance	(1.0	)	(1.1	)	(1.2	)
(Benefit) expense related to COLIs	(1.3	)	0.3		(1.6	)
Other, net	0.1		(1.0	)	(0.2	)
	36.5	%	36.9	%	35.3	%

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):



	2016			2015
Deferred tax assets:
Accrued defined benefit pension and postretirement benefits	$	89,253		$	92,456
Impairment	21,904			23,982
Interest rate swaps	18,483			10,208
Accrued insurance	14,378			13,245
Tax loss and tax credit carryforwards	13,624			14,081
Leasing transactions	11,144			11,442
Share-based compensation	9,091			9,331
Lease commitments related to closed or refranchised locations	7,440			11,471
Accrued incentive compensation	5,536			6,412
Accrued vacation pay expense	2,137			2,193
Other reserves and allowances	1,935			1,584
Deferred income	1,887			1,417
Other, net	3,876			2,030
Total gross deferred tax assets	200,688			199,852
Valuation allowance	(11,365		)	(11,563		)
Total net deferred tax assets	189,323			188,289
Deferred tax liabilities:
Property and equipment, principally due to differences in depreciation	(38,859		)	(38,403		)
Intangible assets	(31,827		)	(30,132		)
Other	(1,050		)	(1,568		)
Total gross deferred tax liabilities	(71,736		)	(70,103		)
Net deferred tax assets	$	117,587		$	118,186

Deferred tax assets as of October 2, 2016 include state net operating loss carry-forwards of approximately $72.5 million expiring at various times between 2017 and 2036. At October 2, 2016 and September 27, 2015, we recorded a valuation allowance related to losses and state tax credits of $11.4 million and $11.6 million, respectively. We believe that it is more likely than not that these net operating 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 due to the conclusion of an audit regarding a specific claim with California. A reconciliation of the beginning and ending amounts of unrecognized tax benefits follows (in thousands):



	2016		2015
Balance beginning of year	$	—	$	374
Change related to tax positions	—		(374		)
Balance at end of year	$	—	$	—

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.

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 2013 and forward. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for fiscal years 2012 and forward and 2011 and forward, respectively.