Income Taxes

The components of the provision for income taxes are as follows (in thousands):



	2013		2012			2011
Current:
Federal	$	156,177	$	174,049		$	119,893
State	27,769		27,429			23,075
	183,946		201,478			142,968
Deferred:
Federal	23,499		(1,734		)	23,130
State	1,064		(628		)	2,022
	24,563		(2,362		)	25,152
Total provision	$	208,509	$	199,116		$	168,120

The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the following periods:



	2013		2012		2011
Federal statutory rate	35.0	%	35.0	%	35.0	%
State tax, net of federal benefit	3.5	%	3.6	%	4.1	%
Valuation allowance	(0.4	)%	1.6	%	—	%
Other permanent items	0.1	%	0.5	%	(0.2	)%
Effective income tax rate	38.2	%	40.7	%	38.9	%

Components of deferred tax assets (liabilities) consist of the following as of the fiscal periods ended (in thousands):



	2013			2012
Inventory	$	35,531		$	30,614
Store closing expense	6,674			12,444
Stock-based compensation	26,692			33,667
Capital loss carryforward	6,242			7,942
Employee benefits	33,156			26,876
Other accrued expenses not currently deductible for tax purposes	4,631			4,658
Deferred rent	27,609			25,625
Insurance	2,352			2,363
Gift cards	11,531			10,478
Deferred revenue currently taxable	4,404			4,829
Non income-based tax reserves	7,098			4,903
Uncertain income tax positions	3,112			2,981
Valuation allowance	(6,242		)	(7,942		)
Total deferred tax assets	162,790			159,438
Property and equipment	(118,854		)	(84,734		)
Inventory	(30,342		)	(36,404		)
Intangibles	(10,875		)	(10,930		)
Other	(24		)	(112		)
Total deferred tax liabilities	(160,095		)	(132,180		)
Net deferred tax asset	$	2,695		$	27,258

In 2013, of the $2.7 million net deferred tax asset, $38.8 million is included within current assets, $2.5 million is included within other long-term assets and $38.6 million is included within other long-term liabilities on the Consolidated Balance Sheets. In 2012, of the $27.3 million net deferred tax asset, $30.3 million is included within current assets, $4.4 million is included within other long-term assets and $7.4 million is included within other long-term liabilities on the Consolidated Balance Sheets.

The Company determined that a valuation allowance of $7.9 million was required for a portion of the deferred tax asset recorded in fiscal 2012 relating to a $32.4 million net capital loss carryforward resulting from the impairment of its investment in JJB Sports, plc ("JJB Sports"). During the first quarter of 2013, the Company determined that it would recover $4.3 million of its investment in JJB Sports, which it had previously fully impaired. There is no related tax expense for this recovery as the Company reversed a portion of the deferred tax valuation allowance it had previously recorded for net capital loss carryforwards it did not expect to realize at the time its investment in JJB Sports was fully impaired.

As of February 1, 2014, the total liability for uncertain tax positions, including related interest and penalties, was approximately $9.0 million.

The following table represents a reconciliation of the Company's total unrecognized tax benefits balances, excluding interest and penalties (in thousands):



	2013			2012			2011
Beginning of fiscal year	$	10,670		$	18,692		$	13,560
Increases as a result of tax positions taken in a prior period	1,651			1,816			5,567
Decreases as a result of tax positions taken in a prior period	(2,240		)	(4,370		)	(52		)
Increases as a result of tax positions taken in the current period	985			1,740			1,966
Decreases as a result of settlements during the current period	(3,559		)	(6,405		)	(1,757		)
Reductions as a result of a lapse of statute of limitations during the current period	—			(803		)	(592		)
End of fiscal year	$	7,507		$	10,670		$	18,692

Included in the balance at February 1, 2014 are $4.4 million of unrecognized tax benefits that would impact our effective tax rate if recognized. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense.

As of February 1, 2014, the liability for uncertain tax positions included $1.5 million for the accrual of interest and penalties. During fiscal 2013, 2012 and 2011, the Company recorded $0.9 million, $0.8 million and $1.3 million, respectively, for the accrual of interest and penalties in its Consolidated Statements of Income. The Company has federal, state and local examinations currently ongoing. It is possible that these examinations may be resolved within 12 months. Due to the potential for resolution of these examinations, and the expiration of various statutes of limitation, it is reasonably possible that $0.6 million of the Company's gross unrecognized tax benefits and interest at February 1, 2014 could be recognized within the next 12 months. The Company does not anticipate that changes in its unrecognized tax benefits will have a material impact on the Consolidated Statements of Income during fiscal 2014.

The Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP"). As part of the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed examinations of 2012 and all prior tax years. The Company is no longer subject to examination in any of its major state jurisdictions for years prior to 2006.