(6) Income Taxes

Total income tax expense for fiscal years 2011, 2012, and 2013 was allocated as follows (in thousands):



	Year Ended
	December 27,		December 25,		December 31,
	2011		2012		2013
Income tax expense from continuing operations	$	4,653	$	5,592	$	5,556
Income tax expense (benefit) from discontinued operations		(504)		(2)		—
Total income tax expense	$	4,149	$	5,590	$	5,556

The components of income tax expense from continuing operations consists of the following (in thousands):



	Year Ended
	December 27,		December 25,		December 31,
	2011		2012		2013
Current tax expense (benefit):
Federal	$	3,179	$	5,406	$	(39)
State		2,250		2,220		1,919
Total current tax expense		5,429		7,626		1,880
Deferred tax expense (benefit):
Federal		(287)		(1,098)		2,859
State		(489)		(936)		817
Total deferred tax expense (benefit)		(776)		(2,034)		3,676
Total income tax expense from continuing operations	$	4,653	$	5,592	$	5,556

The difference between the reported income tax expense from continuing operations and taxes determined by applying the applicable U.S. federal statutory income tax rate to income before taxes from continuing operations is reconciled as follows (dollars in thousands):



	Year Ended
	December 27,			December 25,			December 31,
	2011			2012			2013

Income tax expense at federal statutory rate	$	5,005	35%	$	7,058	35%	$	6,220	35%
State tax expense, net		831	6%		443	2%		2,163	12%
FICA tip and work opportunity credits		(1,743)	-12%		(2,200)	-10%		(2,620)	-15%
Nondeductible (nontaxable) insurance		450	3%		(160)	-1%		(486)	-3%
Other items, net		110	1%		451	2%		279	2%
Total income tax expense from continuing operations	$	4,653	33%	$	5,592	28%	$	5,556	31%

In the second quarter of fiscal 2013, the Company determined that a deferred tax asset of $535 recorded in the fourth quarter of fiscal 2012 relating to local income tax net operating loss carryforwards was not realizable, as the related net operating losses originated in years from which the carryforward period had expired. The Company corrected the deferred tax asset account resulting in a non-cash $535 cumulative adjustment to record additional income tax expense in the second quarter of fiscal 2013. The adjustment did not impact historical cash flows and will not impact the timing of future income tax payments. Prior years’ financial statements were not restated as the impact of these issues was immaterial to previously reported results for any individual prior year and fiscal 2012.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of deferred tax assets and liabilities are presented below (in thousands):



	December 25,		December 31,
	2012		2013

		(In Thousands)
Deferred tax assets:
Equity-based compensation	$	151	$	355
Accrued liabilities		2,629		3,259
Deferred compensation		3,366		4,400
Deferred rent liabilities		6,212		8,282
Other		2,881		2,470
Total deferred tax assets		15,239		18,766
Deferred tax liabilities:
Property and equipment		11,759		19,517
Intangible assets		11,960		11,430
Other		245		221
Total deferred tax liabilities		23,964		31,168
Net deferred tax liabilities	$	(8,725)	$	(12,402)

The Company accounts for unrecognized tax benefits in accordance with the provisions of FASB guidance which, among other directives, requires uncertain tax positions to be recognized only if they are more likely than not to be upheld based on their technical merits. The measurement of the uncertain tax position is based on the largest benefit amount that is more likely than not (determined on a cumulative probability basis) to be realized upon settlement.

The Company may, from time to time, be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to the Company’s financial results. In the event the Company receives an assessment for interest and penalties, it has been classified in the consolidated financial statements as income tax expense. Generally, the Company’s federal, state, and local tax returns for years subsequent to 2009 remain open to examination by the major taxing jurisdictions to which the Company is subject.

At December 27, 2011 and December 25, 2012, the Company’s unrecognized tax benefits totaled approximately $1,631, related primarily to acquisitions and state tax issues. At December 31, 2013, the Company’s unrecognized tax benefits totaled approximately $1,386, related primarily to state tax issues. The Company does not believe its uncertain tax positions will change materially during the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	Year Ended
	December 27,		December 25,		December 31,
	2011		2012		2013
Balance at beginning of year	$	1,691	$	1,631	$	1,631
Additions resulting from current year positions		—		—		—
Additions for positions taken in prior years		—		—		—
Expiration of statute of limitations		(60)		—		(245)
Balance at end of year	$	1,631	$	1,631	$	1,386

The Company accrues interest and penalties in its tax provision. As of December 25, 2012 and December 31, 2013, accrued interest and penalties included in the consolidated balance sheets totaled $2,457 and $2,362, respectively. The change in interest and penalties associated with the Company’s unrecognized tax benefits is included as a component of the Other, net line of the effective tax rate reconciliation.