(12) Income Taxes

The following table represents components of the provision for income taxes for fiscal years ended (in thousands):

	2018			2017			2016
Current:
Federal	$	14,001		$	10,543		$	16,086
State and local		1,944			2,254			2,502
Total current		15,945			12,797			18,588
Deferred:
Federal		(1,811	)		932			342
State and local		17			(113	)		(147	)
Total deferred		(1,794	)		819			195
Total provision for income taxes	$	14,151		$	13,616		$	18,783

The Company’s effective tax rate on earnings from operations for the year ended February 28, 2018, was 30.2%, as compared to 34.0% and 36.8% in 2017 and 2016, respectively. The following summary reconciles the statutory U.S. Federal income tax rate to the Company’s effective tax rate for the fiscal years ended:

	2018				2017				2016
Statutory rate		32.7		%		35.0		%		35.0		%
Provision for state income taxes, net of federal income tax benefit		2.8				3.5				3.1
Domestic production activities deduction		(2.8	)			(2.5	)			(2.5	)
Valuation allowance		—				(3.4	)			0.7
Federal true-up		4.1				0.6				—
Tax Cuts and Jobs Act		(7.6	)			-				—
Other		1.0				0.8				0.5
		30.2		%		34.0		%		36.8		%

On December 22, 2017, H.R. 1, known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. Among other things, the Tax Act permanently lowers the corporate tax rate to 21% from the existing maximum rate of 35%, effective for tax years including or commencing January 1, 2018. As a result of the reduction of the corporate tax rate to 21%, the Company has re-valued its deferred tax assets and liabilities as of the date of enactment, with resulting tax effects accounted for in the reporting period of enactment. This change in the statutory tax rate resulted in reduction in income tax expense being recognized of $3.6 million due to the adjustment of deferred tax liabilities based on the expected prevailing tax rate at the expected time of their realization.

Deferred taxes are recorded to give recognition to temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The tax effects of these temporary differences are recorded as deferred tax assets and deferred tax liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years. Deferred tax liabilities generally represent items that have been deducted for tax purposes, but have not yet been recorded in the consolidated statements of operations. To the extent there are deferred tax assets that are more likely than not to be realized, a valuation allowance would not be recorded. The components of deferred income tax assets and liabilities are summarized as follows (in thousands) for fiscal years ended:

Deferred tax assets	2018		2017
Allowance for doubtful receivables	$	255	$	512
Inventories		738		1,124
Employee compensation and benefits		703		1,448
Pension and noncurrent employee compensation benefits		2,888		5,786
Net operating loss and foreign tax credits		429		438
Stock options		285		552
Total deferred tax assets	$	5,298	$	9,860
Deferred tax liabilities
Property, plant and equipment	$	4,140	$	6,979
Goodwill and other intangible assets		7,158		9,371
Property tax		158		440
Other		31		23
Total deferred tax liabilities	$	11,487	$	16,813
Net deferred income tax liabilities	$	6,189	$	6,953

As of the fiscal year ended 2018, the Company has federal net operating loss carry forwards of approximately $84,000 expiring in fiscal years 2024 through 2025. Based on historical earnings and expected sufficient future taxable income, management believes it will be able to fully utilize the net operating loss carry forwards.

Accounting standards require a two-step approach to determine how to recognize tax benefits in the financial statements where recognition and measurement of a tax benefit must be evaluated separately. A tax benefit will be recognized only if it meets a “more-likely-than-not” recognition threshold. For tax positions that meet this threshold, the tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority.

At fiscal year-end 2018 and 2017, unrecognized tax benefits related to uncertain tax positions, including accrued interest and penalties of $141,000 and $249,000, respectively, are included in other liabilities on the consolidated balance sheets and would impact the effective rate if recognized. For fiscal year 2018, the unrecognized tax benefit includes an aggregate of $2,000 of interest expense. Approximately $2,000 of unrecognized tax benefits relate to items that are affected by expiring statutes of limitations within the next 12 months. A reconciliation of the change in the unrecognized tax benefits for fiscal years ended 2018 and 2017 is as follows (in thousands):

	2018			2017
Balance at March 1, 2017	$	249		$	225
Additions based on tax positions		(25	)		99
Reductions due to lapses of statues of limitations		(83	)		(75	)
Balance at February 28, 2018	$	141		$	249

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions and foreign tax jurisdictions. The Company has concluded all U.S. Federal income tax matters for years through 2013. All material state and local income tax matters have been concluded for years through 2013 and foreign tax jurisdictions through 2013.

The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision. Other than amounts included in the unrecognized tax benefits, the Company did not recognize any interest or penalties for the fiscal years ended 2018, 2017 and 2016.