Income Taxes

Income tax expense (benefit) for the fiscal years 2016, 2015 and 2014 consists of the following (in thousands):



	Fiscal Year
	December 31, 2016			December 26, 2015			December 27, 2014
Current expense
Federal	$	8,854		$	5,813		$	6,068
State	847			736			606
Foreign	132			236			168
Deferred expense (benefit)
Federal	(662		)	(802		)	(1,430		)
State	(52		)	(244		)	(100		)
Income tax expense	$	9,119		$	5,739		$	5,312

A reconciliation of income tax at the United States federal statutory tax rate (using a statutory tax rate of 34% and 35% as appropriate) to income tax expense for fiscal years 2016, 2015 and 2014 in dollars is as follows (in thousands):



	Fiscal Year
	December 31, 2016			December 26, 2015			December 27, 2014
Expected income tax expense at statutory rate	$	8,594		$	5,546		$	4,943
Permanent differences	92			64			53
State tax expense, net of federal benefit	395			544			15
Foreign tax expense	132			236			168
Foreign tax credits	(132		)	(236		)	(168		)
Increase in unrecognized tax benefit	185			104			28
Valuation allowance	—			(317		)	306
Other	(147		)	(202		)	(33		)
Income tax expense	$	9,119		$	5,739		$	5,312

The components of deferred tax assets (liabilities) are as follows (in thousands):



	December 31, 2016			December 26, 2015
Deferred tax assets:
Deferred revenue	$	3,394		$	3,383
Accrued bonus	706			424
Property and equipment	136			66
Equity compensation	818			569
Deferred rent	453			397
Intangible assets	593			788
Other	248			458
NOL/credits	443			443
Valuation allowance	(482		)	(482		)
	6,309			6,046
Deferred tax liabilities:
Intangible assets	(18,613		)	(19,064		)
	(18,613		)	(19,064		)
Net deferred tax liability	$	(12,304	)	$	(13,018	)

The Company had a state net operating loss carry-forward of $23.3 million at December 31, 2016 and December 26, 2015. The state net operating loss carry forwards begin to expire in 2030.

As of December 31, 2016, the Company had a valuation allowance of $482,000 against its deferred tax assets. In assessing whether a deferred tax asset will be realized, the Company considers whether it is more likely than not that some portion, or all of the deferred tax assets will not be realized. The Company considers the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not we will realize a portion of the benefits of the federal and state deductible differences with the exception of $39,000 and $443,000, respectively.

We have not recognized a deferred tax asset for excess tax benefits of $4.3 million that arose directly from tax deductions related to equity compensation greater than amounts recognized for financial reporting. These excess stock compensation benefits will be credited to additional paid-in capital if realized. We use the “with-and-without” method for purposes of determining when excess tax benefits have been realized. In fiscal years 2016, 2015 and 2014, we recognized excess stock compensation benefits of $1,163,000, $593,000, and $749,000, respectively, which was recorded as additional paid-in capital and offset a portion of our current tax liability.

The Company files income tax returns, which are periodically audited by various federal and state jurisdictions. The Company was not subject to federal or state tax examinations prior to 2009. In fiscal 2013 the Internal Revenue Service (“IRS”) commenced an examination of the Company’s U.S. income tax returns for fiscal 2010 and 2011, which was subsequently settled and closed.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



Balance as of December 28, 2013	$	94
Additions for tax positions of prior years	—
Subtractions for tax positions of prior years	—
Additions for tax positions of current year	35
Subtractions for tax positions of current year	—
Balance as of December 27, 2014	129
Additions for tax positions of prior years	—
Subtractions for tax positions of prior years	—
Additions for tax positions of current year	336
Subtractions for tax positions of current year	—
Balance as of December 26, 2015	465
Additions for tax positions of prior years	—
Subtractions for tax positions of prior years	—
Additions for tax positions of current year	137
Subtractions for tax positions of current year	—
Balance as of December 31, 2016	$	602

The Company currently anticipates that $23,000 of the $602,000 of unrecognized tax benefits will be recognized as of December 31, 2016.

As of December 31, 2016 and December 26, 2015, the accrued interest and penalties on the unrecognized tax benefits were $116,000 and $68,000, respectively, excluding any related income tax benefits. The Company recorded accrued interest related to the unrecognized tax benefits and penalties as a component of the provision for income taxes recognized in the Consolidated Statement of Operations.