Income Taxes:

The provision for income taxes consists of the following (in thousands):



	2013			2012			2011
Current tax expense:
Federal	$	175,039		$	165,519		$	112,142
State	19,129			20,342			13,878
Total current	194,168			185,861			126,020

Deferred tax expense (benefit):
Federal	(5,341		)	(20,857		)	3,220
State	(2,968		)	(5,724		)	(1,364		)
Total deferred	(8,309		)	(26,581		)	1,856
Total provision	$	185,859		$	159,280		$	127,876

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the deferred tax assets and liabilities are as follows (in thousands):



	2013			2012
Current tax assets:
Inventory valuation	$	12,133		$	11,981
Accrued employee benefit costs	23,184			27,636
Accrued sales taxes	1,905			3,564
Other	10,388			8,439
	47,610			51,620
Current tax liabilities:
Inventory basis difference	(14,470		)	(26,182		)
Prepaid expenses	(2,100		)	(1,541		)
Other	(1,202		)	(799		)
	(17,772		)	(28,522		)
Net current tax asset	$	29,838		$	23,098

Non-current tax assets:
Capital lease obligation basis difference	$	987		$	1,001
Rent expenses in excess of cash payments required	25,229			25,263
Deferred compensation	16,394			17,970
Workers compensation insurance	5,734			—
Other	6,923			4,574
Valuation allowance	—			(862		)
	55,267			47,946
Non-current tax liabilities:
Depreciation	(51,547		)	(47,219		)
Capital lease assets basis difference	(489		)	(511		)
Other	(3,139		)	(1,693		)
	(55,175		)	(49,423		)
Net non-current tax asset (liability)	$	92		$	(1,477	)

Net deferred tax asset	$	29,930		$	21,621

The Company has evaluated the need for a valuation allowance for all or a portion of the deferred tax assets. The Company believes that all of the deferred tax assets will more likely than not be realized through future earnings. The Company had state tax credit carryforwards of $2.3 million and $2.6 million as of December 28, 2013 and December 29, 2012, respectively, with varying dates of expiration between 2014 and 2024. The Company provided no valuation allowance as of December 28, 2013 and a $0.9 million valuation allowance as of December 29, 2012 for state tax credit carryforwards, due to the uncertainty of utilizing these credits before their expiration dates. A reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate is as follows (in thousands):



	2013			2012			2011
Tax provision at statutory rate	$	179,933		$	152,508		$	122,715
Tax effect of:
State income taxes, net of federal tax benefits	10,505			9,502			8,134
Permanent differences	(4,579		)	(2,730		)	(2,973		)
	$	185,859		$	159,280		$	127,876

The Company and its affiliates file income tax returns in the U.S. and various state and local jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years before 2009. The IRS commenced an examination of the Company’s federal tax returns for 2006 and 2007 which was completed in February 2011, and no IRS adjustments were proposed. In 2012, the IRS commenced an audit of the 2010 federal tax return. As of December 28, 2013, the audit was not finalized. Various states have completed an examination of our income tax returns for 2009 through 2011 with minimal adjustments.

The total amount of unrecognized tax benefits that, if recognized, would decrease the effective tax rate, is $1.6 million at December 28, 2013. In addition, the Company recognizes current interest and penalties accrued related to these uncertain tax positions as interest expense, and the amount is not material to the Consolidated Statements of Income. The Company estimates the overall decrease in unrecognized tax benefits in the next twelve months will range between $0.1 million and $0.3 million. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows (in thousands):



	2013			2012			2011
Balance at beginning of year	$	5,898		$	5,774		$	4,801
Additions based on tax positions related to the current year	741			1,358			1,611
Additions for tax positions of prior years	—			—			—
Reductions for tax positions of prior years	(3,937		)	(1,234		)	(638		)
Reductions due to audit results	(220		)	—			—
Balance at end of year	$	2,482		$	5,898		$	5,774