NOTE 7 – INCOME TAXES

The components of the provision for income taxes are as follows:



	Year Ended Fiscal March
	2016		2015		2014
	(Dollars in thousands)
Current -
Federal	$	29,202	$	28,262	$	25,978
State		2,825		2,956		1,579
		32,027		31,218		27,557
Deferred -
Federal		6,216		6,194		4,793
State		373		144		(273)
		6,589		6,338		4,520
Total	$	38,616	$	37,556	$	32,077

Deferred tax (liabilities) assets consist of the following:



	March 26,		March 28,
	2016		2015
	(Dollars in thousands)
Goodwill	$	(31,075)	$	(24,167)
Other		(981)		(939)
Total deferred tax liabilities		(32,056)		(25,106)
Property and equipment		28,085		20,592
Insurance reserves		11,626		10,813
Warranty and other reserves		4,671		4,538
Stock options		3,040		3,729
Other		9,989		9,544
Total deferred tax assets		57,411		49,216
Net deferred tax assets	$	25,355	$	24,110

We have $4.3 million of state net operating loss carryforwards available as of March 26, 2016. The carryforwards expire in varying amounts through 2036. Based on all available evidence, we have determined that it is more likely than not that sufficient taxable income of the appropriate character within the carryforward period will exist for the realization of the tax benefits on existing state net operating loss carryforwards.

We believe it is more likely than not that all other future tax benefits will be realized as a result of current and future income.

A reconciliation between the U. S. federal statutory tax rate and the effective tax rate reflected in the accompanying financial statements is as follows:



	Year Ended Fiscal March
	2016			2015			2014
	Amount		Percent	Amount		Percent	Amount		Percent
	(Dollars in thousands)
Federal income tax based on statutory tax rate applied to income before taxes	$	36,897	35.0	$	34,774	35.0	$	30,287	35.0
State income tax, net of federal income tax benefit		2,306	2.2		2,170	2.2		2,097	2.4
Other		(587)	(0.6)		612	0.6		(307)	(0.3)
	$	38,616	36.6	$	37,556	37.8	$	32,077	37.1

The following is a rollforward of Monro’s liability for income taxes associated with unrecognized tax benefits:



	Dollars in thousands
Balance at March 30, 2013	$	5,704
Tax positions related to current year:
Additions		1,678
Reductions
Tax positions related to prior years:
Additions
Reductions		(88)
Settlements		(381)
Lapses in statutes of limitations		(1,013)
Balance at March 29, 2014		5,900
Tax positions related to current year:
Additions		2,066
Reductions
Tax positions related to prior years:
Additions		164
Reductions		33
Settlements
Lapses in statutes of limitations		(668)
Balance at March 28, 2015		7,495
Tax positions related to current year:
Additions		1,116
Reductions
Tax positions related to prior years:
Additions
Reductions		(922)
Settlements
Lapses in statutes of limitations		(760)
Balance at March 26, 2016	$	6,929

The total amount of unrecognized tax benefits was $6.9 million at March 26, 2016, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties, and adjusts its unrecognized tax benefits and accrued interest and penalties accordingly. During the year ended March 28, 2015, we recognized interest and penalties of approximately $.1 million, in income tax expense; and during the year ended March 29, 2014, we recorded a benefit from the reversal of accrued interest and penalties of approximately $.1 million in income tax expense. Additionally, we had approximately $.4 million of interest and penalties associated with uncertain tax benefits accrued as of March 26, 2016 and March 28, 2015.

We file U.S. federal income tax returns and income tax returns in various state jurisdictions. Monro’s fiscal 2013 through 2015 U.S. federal tax years and various state tax years remain subject to income tax examinations by tax authorities.