INCOME TAXES

For the fiscal year ended July 30, 2016, income (loss) before income taxes consists of $208.8 million from U.S. operations and $(0.6) million from foreign operations. For the fiscal year ended August 1, 2015, income before income taxes consists of $227.4 million from U.S. operations and $2.4 million from foreign operations. For the fiscal year ended August 2, 2014, income before income taxes consists of $201.1 million from U.S. operations and $6.3 million from foreign operations.

Total federal and state income tax (benefit) expense consists of the following:



	Current		Deferred			Total
	(In thousands)
Fiscal year ended July 30, 2016
U.S. Federal	$	57,157	$	11,383		$	68,540
State & Local	12,718		1,310			$	14,028
Foreign	101		(213		)	$	(112	)
	$	69,976	$	12,480		$	82,456
Fiscal year ended August 1, 2015
U.S. Federal	$	60,848	$	13,209		$	74,057
State & Local	14,119		2,098			16,217
Foreign	729		32			761
	$	75,696	$	15,339		$	91,035
Fiscal year ended August 2, 2014
U.S. Federal	$	66,953	$	(894	)	$	66,059
State & Local	12,660		1,452			14,112
Foreign	1,432		323			1,755
	$	81,045	$	881		$	81,926

Total income tax expense (benefit) was different than the amounts computed using the United States statutory income tax rate of 35% applied to income before income taxes as a result of the following:



	Fiscal year ended
	July 30, 2016			August 1, 2015			August 2, 2014
	(In thousands)
Computed "expected" tax expense	$	72,878		$	80,419		$	72,593
State and local income tax, net of Federal income tax benefit	9,412			10,547			9,135
Non-deductible expenses	1,549			1,551			1,333
Tax effect of share-based compensation	86			165			160
General business credits	(135		)	(365		)	(114		)
Other, net	(1,334		)	(1,282		)	(1,181		)
Total income tax expense	$	82,456		$	91,035		$	81,926

The income tax expense (benefit) for the years ended July 30, 2016 and August 1, 2015 and August 2, 2014 was allocated as follows:



	July 30, 2016			August 1, 2015			August 2, 2014
	(In thousands)
Income tax expense	$	82,456		$	91,035		$	81,926
Stockholders' equity, difference between compensation expense for tax purposes and amounts recognized for financial statement purposes	83			(2,746		)	(2,601		)
Other comprehensive income	(2,050		)	(293		)	—
	$	80,489		$	87,996		$	79,325

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at July 30, 2016 and August 1, 2015 are presented below:



	2016			2015
	(In thousands)
Deferred tax assets:
Inventories, principally due to additional costs inventoried for tax purposes	$	10,682		$	9,034
Compensation and benefits related	25,453			23,651
Accounts receivable, principally due to allowances for uncollectible accounts	4,734			3,279
Accrued expenses	7,519			9,077
Net operating loss carryforwards	1,059			1,177
Interest rate swap agreements	2,343			293
Other deferred tax assets	29			20
Total gross deferred tax assets	51,819			46,531
Less valuation allowance	—			—
Net deferred tax assets	$	51,819		$	46,531
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation	$	62,030		$	47,872
Intangible assets	48,996			31,955
Other	785			15
Total deferred tax liabilities	111,811			79,842
Net deferred tax liabilities	$	(59,992	)	$	(33,311	)
Current deferred income tax assets	$	35,228		$	32,333
Non-current deferred income tax liabilities	(95,220		)	(65,644		)
	$	(59,992	)	$	(33,311	)

In assessing the need to establish a valuation reserve for the recoverability of deferred tax assets, 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 relevant evidence, both positive and negative, to determine the need for a valuation allowance. Information evaluated includes the Company's financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. As of July 30, 2016, the Company has sufficient taxable income in the federal carryback period and anticipates sufficient future taxable income over the periods in which the deferred tax assets are deductible. The Company also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the future. Therefore, the ultimate realization of deferred tax assets for federal and state tax purposes appears more likely than not at July 30, 2016 and correspondingly no valuation allowance has been established.

At July 30, 2016, the Company had net operating loss carryforwards of approximately $3.0 million for federal income tax purposes. The federal carryforwards are subject to an annual limitation of approximately $0.3 million under Internal Revenue Code Section 382. The carryforwards expire at various times between fiscal years 2017 and 2027.

The Company and its subsidiaries file income tax returns in the United States federal jurisdiction and in various state jurisdictions. UNFI Canada files income tax returns in Canada and certain of its provinces. U.S. federal income tax examination years prior to 2013 have either statutorily or administratively been closed with the Internal Revenue Service, and with limited exception, the fiscal tax years that remain subject to examination by state jurisdictions range from the Company's fiscal 2012 to fiscal 2015.

The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the fiscal year ended July 30, 2016, the net tax benefit realized in the consolidated statement of income was de minimis. For the fiscal year ended August 1, 2015, the Company recognized net tax benefits of $0.5 million in its consolidated statement of income. For the fiscal year ended August 2, 2014, the Company recognized net tax benefits of $0.3 million in its consolidated statement of income related to tax examinations closed during the fiscal year.

The retained earnings of the Company's non-U.S. subsidiaries that have not been subject to U.S. tax are $15.6 million at July 30, 2016. The Company considers these unremitted earnings to be indefinitely reinvested; therefore, we have not provided a deferred tax liability for any residual U.S. tax that may be due upon repatriation of these earnings. Because of the effect of U.S. foreign tax credits, it is not practicable to estimate the amount of tax that might be payable on these earnings in the event they no longer are indefinitely reinvested.