8. INCOME TAXES

On November 25, 2015, the Company’s “S” corporation status terminated and the Company became subject to corporate-level federal and state income taxes at prevailing corporate rates.

The components of income tax expense for the year ended January 31, 2016 were as follows:



(in thousands)
Current:
Federal	$	1,114
State		194
		1,308
Deferred:
Federal		100
State		(69)
		31
Total income tax expense	$	1,339

A reconciliation of income tax expense to the amount computed at the federal statutory rate is as follows for the year ended January 31, 2016:



(in thousands)
Federal taxes at statutory rate	$	10,073	35.0	%
Tax effect of earnings not subject to federal income tax due to "S" corporation status		(8,952)	(31.1)	%
State and local income taxes, net of federal benefit		124	0.4	%
Impact of change in tax status		94	0.3	%
Total income tax expense	$	1,339	4.6	%

As a result of the conversion to a “C” corporation, the Company recorded an increase in net deferred tax liabilities of $0.1 million and a one-time deferred tax expense of $0.1 million during the fourth quarter of fiscal 2015.

Deferred income taxes reflect the net tax effects of temporary differences between U.S. GAAP and tax bases of assets and liabilities. Significant components of deferred tax assets and liabilities as of January 31, 2016, were as follows:



(in thousands)
Deferred tax assets:
Returns allowance	$	485
Uniform capitalization		597
Inventory		548
Deferred rent		479
Accruals		975
Total deferred tax assets		3,084

Deferred tax liabilities:
Property and equipment		1,283
Stock-based compensation		686
Prepaid expenses		1,026
Goodwill and intangibles		120
Total deferred tax liabilities		3,115
Net deferred tax liabilities	$	31

Uncertain Tax Positions

As of January 31, 2016 and February 1, 2015, there were no material unrecognized tax benefits. The Company does not anticipate that there will be a material change in the balance of the unrecognized tax benefits in the next 12 months. Any interest and penalties related to uncertain tax positions are recorded in income tax expense. There were no amounts recorded as tax expense for interest or penalties for the years ended January 31, 2016, February 1, 2015 and February 2, 2014.

The Company files income tax returns in the United States federal jurisdiction and in various state jurisdictions. Federal tax returns for tax years beginning January 1, 2012, and state tax returns for tax years beginning January 1, 2011, are open for examination.