8. Income Taxes

The components of the net deferred tax liability are as follows:

	May 30, 2013		May 31, 2012
	(in thousands)
Current deferred income tax assets:
Accrued employee benefits	$	838	$	811
Other		2,039		1,986
Net current deferred tax assets	$	2,877	$	2,797

Noncurrent deferred income tax (liabilities) assets:
Depreciation and amortization	$	(58,032)	$	(58,100)
Accrued employee benefits		13,192		12,607
Other		1,324		1,121
Net noncurrent deferred tax liabilities	$	(43,516)	$	(44,372)

Income tax expense consists of the following:

	Year Ended
	May 30, 2013		May 31, 2012		May 26, 2011
	(in thousands)
Current:
Federal	$	10,048	$	10,617	$	3,407
State		2,448		3,082		(58)
Deferred:
Federal		(964)		1,325		3,264
State		(182)		(319)		1,642
	$	11,350	$	14,705	$	8,255

The Company’s effective income tax rate, adjusted for earnings from noncontrolling interests, for Fiscal 2013, 2012 and 2011 was 39.3%, 39.3% and 37.8%, respectively. The Company has not included the income tax expense related to the net earnings attributable to noncontrolling interest in its income tax expense (benefit) as the entities are considered pass-through entities and, as such, the income tax expense is attributable to its owners.

A reconciliation of the statutory federal tax rate to the effective tax rate on earnings attributable to The Marcus Corporation follows:

	Year Ended
	May 30, 2013			May 31, 2012			May 26, 2011
Statutory federal tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		5.3			4.8			4.8
Unrecognized tax benefits and related interest		(0.6)			(1.1)			-
Other		(0.4)			0.6			(2.0)
		39.3	%		39.3	%		37.8	%

Net income taxes paid (refunds received) in fiscal 2013, 2012, and 2011 totaled $10,902,000, $14,496,000, and $(1,330,000), respectively.

A reconciliation of the beginning and ending gross amounts of unrecognized tax benefit are as follows:

	Year Ended
	May 30, 2013		May 31, 2012		May 26, 2011
	(in thousands)
Balance at beginning of year	$	1,614	$	2,543	$	2,623
Increases due to:
Tax positions taken in prior years		102		1,535		-
Tax positions taken in current year		-		-		-
Decreases due to:
Tax positions taken in prior years		-		-		(66)
Settlements with taxing authorities		(1,535)		(2,301)		-
Lapse of applicable statute of limitations		(79)		(163)		(14)
Balance at end of year	$	102	$	1,614	$	2,543

The Company’s total unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate were $67,000, $52,000, and $157,000 as of May 30, 2013, May 31, 2012, and May 26, 2011, respectively. At May 30, 2013, the Company had accrued interest of $43,000 and no accrued penalties, compared to accrued interest of $355,000 and no accrued penalties at May 31, 2012. The Company classifies interest and penalties relating to income taxes as income tax expense. For the year ended May 30, 2013, $(191,000) of interest and no accrued penalties were recognized in the statement of earnings, compared to $44,000 of interest and $(436,000) of penalties for the year ended May 31, 2012 and $(39,000) of interest and no penalties for the year ended May 26, 2011.

At May 30, 2013, the Internal Revenue Service had concluded its examination of the Company’s consolidated federal income tax returns for the years 2009 and 2010. With certain exceptions, the Company’s state income tax returns are no longer subject to examination for the fiscal years 2008 and prior. At this time, the Company does not expect the results from any income tax audit or appeal to have a significant impact on the Company’s financial statements.

The Company does not expect its unrecognized tax benefits to change significantly over the next twelve months.