INCOME TAXES

Income Tax Provision- The following table presents the composition of the provision for income taxes for continuing operations for the periods presented:



	Fiscal year ended
	January 30, 2016		January 31, 2015			February 1, 2014

Current:	(in thousands)
Federal	$	64,416	$	80,205		$	36,407
Foreign	941		716			22
State and local	9,186		16,832			14,671
Total current tax expense	74,543		97,753			51,100

Deferred:
Federal	8,035		(1,616		)	42,557
Foreign	817		—			—
State and local	411		255			(1,098		)
Total deferred tax expense	9,263		(1,361		)	41,459
Income tax provision	$	83,806	$	96,392		$	92,559

Rate Reconciliation- The following table presents a reconciliation of the expected income taxes for continuing operations based upon the statutory federal income tax rate:



	Fiscal year ended
	January 30, 2016			January 31, 2015			February 1, 2014

	(in thousands)
Income tax expense at federal statutory rate	$	76,944		$	87,297		$	85,402
State and local taxes-net	7,847			8,808			8,532
Foreign	1,031			(405		)	(16		)
Other	(2,016		)	692			(1,359		)
Income tax provision	$	83,806		$	96,392		$	92,559



	January 30, 2016			January 31, 2015

	(in thousands)
Deferred tax assets:
State net operating loss and tax credits	$	571		$	701
Inventory	7,961			7,562
Construction and tenant allowances	3,454			6,074
Stock-based compensation	10,799			9,624
Benefit from uncertain tax positions	85			100
Guarantees	4			1,185
Accrued expenses	2,495			1,890
Accrued rewards	4,016			5,918
Accrued rent	15,063			15,395
Other	14,312			14,317
Total deferred tax assets, gross of valuation allowance	58,760			62,766
Less: valuation allowance	(1,250		)	(1,246		)
Total deferred tax assets, net of valuation allowance	57,510			61,520

Deferred tax liabilities:
Property and equipment	(32,215		)	(27,236		)
Prepaid expenses	(1,024		)	(1,113		)
Other	(2,456		)	(2,092		)
Total deferred tax liabilities	(35,695		)	(30,441		)

Total – net deferred tax asset	$	21,815		$	31,079

The federal net operating loss and state net operating loss and tax credits were fully utilized in 2013. The Company establishes valuation allowances for deferred tax assets when the amount of expected future taxable income is not likely to support the use of the deduction or credit. The valuation allowance as of January 30, 2016 is related to a capital loss carryforward, federal and state income tax credits and state income tax refunds. The valuation allowance as of January 31, 2015 was related to a capital loss carryforward and state income tax credits.

As of January 30, 2016, U.S. taxes have not been provided on unremitted earnings of subsidiaries operating outside of the United States. These earnings, which are considered to be invested indefinitely, would become subject to income tax if the Company elects to distribute these foreign earnings in the future. Determination of the amount of unrecognized deferred U.S. income tax liability on these unremitted earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs.

Uncertain Tax Positions- As of January 30, 2016, January 31, 2015 and February 1, 2014, unrecognized tax benefits of $3.9 million, $3.4 million and $1.8 million, respectively, of the total unrecognized tax benefits would affect the effective tax rate if recognized. The following table presents the reconciliation of the beginning and ending amount of unrecognized tax benefits as of the periods presented:



	January 30, 2016			January 31, 2015			February 1, 2014

	(in thousands)
Beginning balance	$	3,386		$	1,838		$	1,253
Additions for tax positions taken in the current year	1,511			1,621			1,184
Reductions for tax positions taken in prior years:
Changes in judgment	—			—			(69		)
Lapses of applicable statutes of limitations	(644		)	—			(530		)
Settlements during the year	(365		)	(73		)	—
Ending balance	$	3,888		$	3,386		$	1,838

While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, any changes are not expected to have a material impact on the Company's financial position, results of operations or cash flows.

As of January 30, 2016 and January 31, 2015, $0.6 million and $0.5 million, respectively, was accrued for the payment of interest and penalties.

DSW Inc. is no longer subject to U.S federal income tax examination and state income tax examinations for years prior to 2011. DSW Inc. estimates the range of possible changes that may result from any current and future tax examinations to be insignificant at this time.