Note 12 – Taxes on Income

The income tax provision for continuing operations is made up of the following components:

	January 2, 2016			January 3, 2015		December 28, 2013
(In thousands)	(52 Weeks)			(53 Weeks)		(39 Weeks)
Currently payable:
Federal	$	31,437		$	27,015	$	3,897
State		3,144			777		510
Total currently payable		34,581			27,792		4,407
Deferred:
Federal		3,255			3,362		531
State		(743	)		175		(4,097	)
Total deferred		2,512			3,537		(3,566	)
Total	$	37,093		$	31,329	$	841

The effective income tax rates are different from the statutory federal income tax rates for the following reasons:

	January 2, 2016				January 3, 2015				December 28, 2013
	(52 Weeks)				(53 Weeks)				(39 Weeks)
Federal statutory income tax rate		35.0		%		35.0		%		35.0		%
State taxes, net of federal income tax benefit		1.6				2.9				(112.7	)
Charitable product donations		(0.3	)			(0.4	)			(13.4	)
Non-deductible merger expenses		—				—				101.3
Changes in tax contingencies		(0.1	)			(2.7	)			36.9
Domestic production activities deduction		(0.2	)			(0.2	)			(8.6	)
Non-deductible expenses		0.4				0.9				3.8
Other, net		0.6				(0.9	)			(1.7	)
Effective income tax rate		37.0		%		34.6		%		40.6		%

Deferred tax assets and liabilities resulting from temporary differences as of January 2, 2016 and January 3, 2015 are as follows:

(In thousands)	January 2, 2016			January 3, 2015
Deferred tax assets:
Employee benefits	$	29,218		$	29,842
Accrued workers' compensation		2,712			3,074
Allowance for doubtful accounts		3,341			2,951
Intangible assets		326			1,128
Restructuring		732			1,947
Deferred revenue		2,047			1,843
Accrued rent		3,884			4,635
Accrued insurance		866			1,107
All other		6,804			5,627
Total deferred tax assets		49,930			52,154

Deferred tax liabilities:
Property and equipment		43,201			47,860
Inventory		48,120			51,616
Goodwill		62,005			53,628
Convertible debt interest		524			789
Leases		12,279			10,585
All other		401			1,402
Total deferred tax liabilities		166,530			165,880
Net deferred tax liability	$	(116,600	)	$	(113,726	)

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)	January 2, 2016			January 3, 2015
Balance at beginning of year	$	2,179		$	8,805
Gross increases - tax positions taken in prior years		186			161
Gross decreases - tax positions taken in prior years		(105	)		(5,812	)
Gross increases - tax positions taken in current year		660			650
Lapse of statute of limitations		(709	)		(1,625	)
Balance at end of year	$	2,211		$	2,179

Unrecognized tax benefits of $0.8 million are set to expire prior to December 31, 2016. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The amount of unrecognized tax benefits, including interest and penalties, that would reduce the Company’s effective income tax rate if recognized in future periods was $1.2 million as of January 2, 2016.

SpartanNash or its subsidiaries file income tax returns with federal, state and local tax authorities within the United States. With few exceptions, SpartanNash is no longer subject to U.S. federal, state or local examinations by tax authorities for fiscal years before March 26, 2011. Income tax returns related to the former Nash-Finch Company, with few exceptions, are no longer subject to U.S. federal, state or local examinations by tax authorities for the fiscal year ended December 31, 2011 and earlier.