14.

Income Taxes

The components of the income tax provision are as follows:

	2016		2015			2014
Current:
Federal	$	3,728	$	7,972		$	4,168
State		896		1,533			596

Deferred:
Increase (decrease) in valuation allowance		-		(70	)		(974	)
Federal		4,559		1,520			221
State		765		480			1,297
Total	$	9,948	$	11,435		$	5,308

A reconciliation of the statutory federal income tax rate and the effective income tax rate, as a percentage of income before income taxes, is as follows:

	2016			2015			2014
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
Adjustments to state net operating loss carryforwards		-			-			3.3
Change in income tax valuation allowance		-			(0.1	)		(3.7	)
Change in income tax reserves		-			0.1			(1.7	)
State income tax, net of federal benefit		4.2			4.4			4.9
Benefit of goodwill basis difference		-			(3.2	)		-
Excess tax benefits from stock-based compensation		(0.3	)		-			-
Other		(0.3	)		(0.3	)		(1.5	)
Effective income tax rate		38.6	%		35.9	%		36.3	%

Excess tax benefits in the amount of

$1,998

and

$300

were recognized as additional paid - in capital during fiscal

2015

and

2014,

respectively, resulting from the exercise of stock options and the release of restricted shares. Subsequent to the adoption of ASU

2016

in fiscal

2016

(see Note

2),

excess tax benefits of

$87

were recognized as a component of income tax expense.

The income tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred income tax assets and deferred income tax liabilities, are as follows:

	November 26, 2016		November 28, 2015
Deferred income tax assets:
Trade accounts receivable	$	307	$	506
Inventories		2,407		2,420
Notes receivable		562		1,795
Post employment benefit obligations		5,338		6,992
State net operating loss carryforwards		731		927
Unrealized loss from affiliates		217		356
Net deferred rents		3,112		2,674
Other		2,005		2,165
Gross deferred income tax assets		14,679		17,835
Valuation allowance		-		-
Total deferred income tax assets		14,679		17,835

Deferred income tax liabilities:
Property and equipment		5,179		3,093
Intangible assets		1,012		860
Prepaid expenses and other		417		411

Total deferred income tax liabilities		6,608		4,364

Net deferred income tax assets	$	8,071	$	13,471

At the beginning of fiscal

2014

we carried a valuation allowance of

$1,044

which was primarily related to state net operating loss carryforwards for which it was considered to be more likely than not that they would not be utilized prior to their expiration. During fiscal

2014

we reduced our valuation allowance related to adjustments to state net operating loss carryforwards primarily due to state tax law changes resulting in a credit to income of

$974,

$0.09

per basic and diluted share. The remaining balance in the valuation allowance was

at both

November

26,

2016

and

November

28,

2015.

The following table represents a summary of the valuation allowances against deferred tax assets:

	2016		2015			2014

Balance, beginning of the year	$	-	$	70		$	1,044
Additions charged to expense				-			-
Deductions reducing expense		-		(70	)		(974	)
Balance, end of the year	$	-	$	-		$	70

We have state net operating loss carryforwards available to offset future taxable state income of

$9,057,

which expire in varying amounts between

2017

and

2030.

Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

Income taxes paid, net of refunds received, during

2016,

2015

and

2014

were

$9,949,

$5,906,

and

$2,367,

respectively.

As of

November

29,

2014,

the gross amount of unrecognized tax benefits was approximately

$1,236,

exclusive of interest and penalties. Substantially all of this balance, along with additional amounts recognized during fiscal

2015,

was effectively settled as of

November

28,

2015.

We regularly evaluate, assess and adjust the related liabilities in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period.

The following table summarizes the activity related to our gross unrecognized tax benefits:

	2016		2015			2014
Balance, beginning of the year	$	12	$	1,236		$	1,497
Gross increases		43		12			-
Gross decreases due to settlements		-		(1,236	)		(221	)
Gross decreases primarily due to the expiration of statutes		-		-			(40	)

Balance, end of the year	$	55	$	12		$	1,236

We recognize interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal

2016,

2015,

and

2014,

we recognized

$15,

$(144),

and

of interest expense (recovery) and

$10,

$3,

and

$10

of penalty expense, respectively, related to the unrecognized benefits noted above in our consolidated statements of income. At

November

26,

2016

and

November

28,

2015,

the balance of accrued interest and penalties associated with unrecognized tax benefits was not material.

Significant judgment is required in evaluating the Company's federal and state tax positions and in the determination of its tax provision. Despite our belief that the liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matter. We

may

adjust these liabilities as relevant circumstances evolve, such as guidance from the relevant tax authority, or resolution of issues in the courts. These adjustments are recognized as a component of income tax expense in the period in which they are identified. The Company also cannot predict when or if any other future tax payments related to these tax positions

may

occur.

We remain subject to examination for tax years

2013

through

2015

for all of our major tax jurisdictions.