Income Taxes:

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



	2014			2013			2012
Current tax expense:
Federal	$	211,383		$	175,039		$	165,519
State	25,133			19,129			20,342
Total current	236,516			194,168			185,861

Deferred tax (benefit) expense:
Federal	(14,493		)	(5,341		)	(20,857		)
State	(5,321		)	(2,968		)	(5,724		)
Total deferred	(19,814		)	(8,309		)	(26,581		)
Total provision	$	216,702		$	185,859		$	159,280

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):



	2014			2013
Current tax assets:
Inventory valuation	$	16,602		$	12,133
Accrued employee benefit costs	18,770			23,184
Accrued sales tax audit reserve	2,053			1,905
Other	11,585			10,388
	49,010			47,610
Current tax liabilities:
Inventory basis difference	(4,657		)	(14,470		)
Prepaid expenses	(2,109		)	(2,100		)
Other	(1,282		)	(1,202		)
	(8,048		)	(17,772		)
Net current tax asset	$	40,962		$	29,838

Non-current tax assets:
Rent expenses in excess of cash payments required	27,166			25,229
Deferred compensation	17,956			16,394
Workers compensation insurance	6,989			5,734
General liability insurance	2,741			557
Lease exit obligations	2,437			2,354
Income tax credits	2,205			—
Accrued sales tax audit reserve	2,085			1,547
Other	3,745			3,452
	65,324			55,267
Non-current tax liabilities:
Depreciation	(52,626		)	(51,547		)
Other	(3,916		)	(3,628		)
	(56,542		)	(55,175		)
Net non-current tax asset	$	8,782		$	92

Net deferred tax asset	$	49,744		$	29,930

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 $5.0 million and $2.3 million as of December 27, 2014 and December 28, 2013, respectively, with varying dates of expiration between 2015 and 2024. The Company provided no valuation allowance as of December 27, 2014 and December 28, 2013 for state tax credit carryforwards, as the Company believes it is more likely than not that all of these credits will be utilized 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):



	2014			2013			2012
Tax provision at statutory rate	$	205,656		$	179,933		$	152,508
Tax effect of:
State income taxes, net of federal tax benefits	12,878			10,505			9,502
Permanent differences	(1,832		)	(4,579		)	(2,730		)
	$	216,702		$	185,859		$	159,280

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 2010. In 2012, the IRS commenced an audit of the 2010 federal tax return. In 2014, the 2010 IRS audit was finalized with minimal adjustments. Various states have completed an examination of our income tax returns for 2010 through 2012 with minimal adjustments.

The total amount of unrecognized tax benefits that, if recognized, would decrease the effective tax rate, is $2.3 million at December 27, 2014. 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 $0.5 million. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (exclusive of interest and penalties) is as follows (in thousands):



	2014			2013			2012
Balance at beginning of year	$	2,482		$	5,898		$	5,774
Additions based on tax positions related to the current year	1,104			741			1,358
Additions for tax positions of prior years	280			—			—
Reductions for tax positions of prior years	(366		)	(3,937		)	(1,234		)
Reductions due to audit results	—			(220		)	—
Balance at end of year	$	3,500		$	2,482		$	5,898