NOTE 7 – INCOME TAXES

The components of the provision for income taxes are as follows:



	Year Ended Fiscal March
	2015		2014		2013
	(Dollars in thousands)
Current -
Federal	$	28,262	$	25,978	$	22,366
State		2,956		1,579		2,266
		31,218		27,557		24,632
Deferred -
Federal		6,194		4,793		(101)
State		144		(273)		(274)
		6,338		4,520		(375)
Total	$	37,556	$	32,077	$	24,257

Deferred tax (liabilities) assets consist of the following:



	March 28,		March 29,
	2015		2014
	(Dollars in thousands)
Goodwill	$	(24,167)	$	(18,189)
Other		(939)		(734)
Total deferred tax liabilities		(25,106)		(18,923)
Property and equipment		20,592		5,815
Insurance reserves		10,813		9,774
Warranty and other reserves		4,538		4,228
Stock options		3,729		3,897
Accrued compensation		1,913		1,650
Deferred rent		1,861		1,961
Other		5,770		5,168
Total deferred tax assets		49,216		32,493
Net deferred tax assets	$	24,110	$	13,570

We have $4.8 million of state net operating loss carryforwards available as of March 28, 2015. The carryforwards expire in varying amounts through 2035. Based on all available evidence, we have determined that it is more likely than not that sufficient taxable income of the appropriate character within the carryforward period will exist for the realization of the tax benefits on existing state net operating loss carryforwards.

We believe it is more likely than not that all other future tax benefits will be realized as a result of current and future income.

A reconciliation between the U. S. federal statutory tax rate and the effective tax rate reflected in the accompanying financial statements is as follows:



	Year Ended Fiscal March
	2015			2014			2013
	Amount		Percent	Amount		Percent	Amount		Percent
	(Dollars in thousands)
Federal income tax based on statutory tax rate applied to income before taxes	$	34,774	35.0	$	30,287	35.0	$	23,388	35.0
State income tax, net of federal income tax benefit		2,170	2.2		2,097	2.4		1,159	1.7
Other		612	0.6		(307)	(0.3)		(290)	(0.4)
	$	37,556	37.8	$	32,077	37.1	$	24,257	36.3

The following is a rollforward of Monro’s liability for income taxes associated with unrecognized tax benefits:



	Dollars in thousands
Balance at March 31, 2012	$	5,484
Tax positions related to current year:
Additions		1,198
Reductions
Tax positions related to prior years:
Additions
Reductions
Settlements		(266)
Lapses in statutes of limitations		(712)
Balance at March 30, 2013		5,704
Tax positions related to current year:
Additions		1,678
Reductions
Tax positions related to prior years:
Additions
Reductions		(88)
Settlements		(381)
Lapses in statutes of limitations		(1,013)
Balance at March 29, 2014		5,900
Tax positions related to current year:
Additions		2,066
Reductions
Tax positions related to prior years:
Additions		164
Reductions		33
Settlements
Lapses in statutes of limitations		(668)
Balance at March 28, 2015	$	7,495

The total amount of unrecognized tax benefits was $7.5 million at March 28, 2015, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties, and adjusts its unrecognized tax benefits and accrued interest and penalties accordingly. During the year ended March 28, 2015, we recognized interest and penalties of approximately $.1 million in income tax expense; and during the years ended March 29, 2014 and March 30, 2013, we recorded a benefit from the reversal of accrued interest and penalties of approximately $.1 million and $.2 million, respectively, in income tax expense. Additionally, we had approximately $.4 million and $.3 million of interest and penalties associated with uncertain tax benefits accrued as of March 28, 2015 and March 29, 2014, respectively.

We file U.S. federal income tax returns and income tax returns in various state jurisdictions. Monro’s fiscal 2012 through 2015 U.S. federal tax years and various state tax years remain subject to income tax examinations by tax authorities.