Income Taxes

The provision (benefit) for income taxes for the fiscal years ended December 31, 2013, December 25, 2012 and December 27, 2011 consisted of the following (in thousands):



	Successor					Predecessor
	December 31, 2013		December 25, 2012			December 27, 2011
Current:
Federal	$	3,626	$	(597	)	$	2,446
State	1,826		88			2,471
Deferred:
Federal	2,408		2,179			(7,015		)
State	307		617			(1,405		)
Income tax expense (benefit)	$	8,167	$	2,287		$	(3,503	)

Items of reconciliation to the statutory rate:



	Successor						Predecessor
	December 31, 2013			December 25, 2012			December 27, 2011
Tax computed at U.S. federal statutory rate	$	13,268		$	6,058		$	421
State and local income taxes (net of federal benefit)	1,483			675			(223		)
Tax credits	(5,465		)	(3,303		)	(5,211		)
Charitable contributions	(569		)	(827		)	(654		)
Non-deductible transaction expenses	—			—			1,335
Uncertain tax position (release) accrual	(404		)	(444		)	622
Other	(146		)	128			207
Income tax expense (benefit)	$	8,167		$	2,287		$	(3,503	)

During 2013, the Company generated $6.0 million of employment-related tax credits from continuing operations compared to $5.0 million in 2012 and $7.7 million in 2011.

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):



	December 31, 2013			December 25, 2012
Assets:
General business credit carryforwards	$	9,118		$	13,450
Insurance reserves	9,093			9,078
Profit sharing and vacation	8,072			6,833
Unfavorable leasehold interests	4,241			4,933
Deferred rent	2,524			2,053
Other	3,653			6,074
Total deferred tax assets	36,701			42,421
Liabilities:
Depreciation and amortization	(230,322		)	(232,661		)
Debt refinancing	(3,556		)	(4,294		)
Favorable leasehold interests	(3,434		)	(3,564		)
Other	(2,949		)	(2,747		)
Total deferred tax liabilities	(240,261		)	(243,266		)
Net deferred tax liability	$	(203,560	)	$	(200,845	)

Current asset	$	10,895		$	17,445
Non-current liability	$	(214,455	)	$	(218,290	)

The Company files a consolidated US federal tax return with the parent company, NPC Holdings. The Company allocates taxes between it and the parent company utilizing the separate return method.

The liability for uncertain tax positions was $4.0 million as of December 31, 2013, was considered long term and was included in other deferred items in the Consolidated Balance Sheets. The $4.0 million liability includes $1.1 million for interest and penalties. Interest and penalties related to unrecognized tax benefits are included in the provision for income taxes in the Consolidated Statements of Income. The Company recorded a deferred tax asset related to total state tax exposures of $0.6 million.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, (in thousands):



	December 31, 2013			December 25, 2012			December 27, 2011
Beginning balance	$	4,607		$	9,527		$	9,049
Purchase accounting adjustments	—			(6,682		)	—
Additions based on tax positions related to the current year	—			2,439			64
Lapse of applicable statute of limitations	(743		)	(895		)	(50		)
Additional interest / penalties accrued	113			218			634
Adjustments to prior year positions	—			—			(170		)
Ending balance	$	3,977		$	4,607		$	9,527

The net impact on the effective tax rate from the release of the unrecognized tax benefits would be $1.0 million including consideration of the indirect tax benefits established with regard to such reserves. The Company has a liability established with regard to uncertain areas of tax law that could be released in the next 12 months, to the extent the statute of limitations with regard to this item expires.

The Company files income tax returns in the U.S. and various state jurisdictions. As of December 31, 2013, the Company is subject to examination in the U.S. federal tax jurisdiction for the 2010-2012 tax years. The Company is also subject to examination in various state jurisdictions for the 2006-2012 tax years, none of which was individually material.

At December 31, 2013, the Company had U.S. general business credit carryforwards of $9.1 million which begin expiring in 2031.