Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The amount of the deferred tax assets considered realizable could be adjusted if estimates of future taxable income during the carryforward periods are reduced or increased, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence, such as the Company’s projections for growth. Significant components of our deferred tax liabilities and assets as of April 25, 2014, and April 26, 2013, were as follows:



	April 25, 2014			April 26, 2013
Deferred tax assets:
Self-insurance	6,222			6,823
Stock and deferred compensation plans	15,405			16,130
Deferred proceeds on Mimi’s Café sale	4,874			6,244
State net operating loss carry forward	3,983			4,786
Credit carryforwards	3,620			—
Inventory	2,690			2,286
Other	6,242			7,286
Total deferred tax assets, gross	43,036			43,555
Valuation allowance	(771		)	(570		)
Net deferred tax assets	42,265			42,985

Deferred tax liabilities:
Basis difference in fixed assets	54,331			62,177
Other	2,107			1,539
Total deferred tax liabilities	56,438			63,716
Net deferred tax liabilities	$	14,173		$	20,731

There are $3,983 of state net operating loss carry forwards that will expire at various times through 2034.

As of April 25, 2014, and April 26, 2013, the valuation allowance for net operating loss carryovers totaled $771 and $570 respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and taxable income in carryback years, and tax-planning strategies when making this assessment. No other valuation allowances have been provided for deferred tax assets because management believes that it is more-likely-than-not that the net deferred tax assets will be realized in the future.

Significant components of the provision (benefit) for income taxes are as follows:



	2014			2013			2012
Current:
Federal	$	7,734		$	(2,602	)	$	32,246
State	(1,236		)	3,772			4,082
Total current	6,498			1,170			36,328
Deferred:
Federal	(6,769		)	583			(7,248		)
State	414			(7,837		)	(674		)
Total deferred	(6,355		)	(7,254		)	(7,922		)
Total tax provision (benefit)	$	143		$	(6,084	)	$	28,406

Our provision (benefit) for income taxes differs from the amounts computed by applying the federal statutory rate due to the following:



	2014		2013		2012
Provision (benefit) at statutory rate	35.0	%	35.0	%	35.0	%
State income tax (benefit) — net	3.4		(2.5	)	2.1
Federal tax credits	(17.0	)	(6.0	)	(4.6	)
Worthless stock	(1.9	)	(30.1	)	—
Officers life insurance	(2.6	)	(1.4	)	—
Settlements with state taxing authorities	(4.0	)	—		(2.1	)
Domestic Production Activity Deduction	(8.7	)	—		(0.6	)
Other	(3.7	)	(3.0	)	(1.0	)
Provision (benefit) for income taxes	0.5	%	(8.0	)%	28.8	%

Taxes paid during fiscal 2014, fiscal 2013 and fiscal 2012 were $16,332, $34,458, and $33,686, respectively.

Uncertain Tax Positions

The following table summarizes activity of the total amounts of unrecognized tax benefits:



	2014			2013			2012
Balance at beginning of fiscal year	$	9,554		$	11,045		$	11,340
Additions based on tax positions related to the current year	31			366			600
Additions for tax positions of prior years	1,004			123			2,615
Reductions for tax positions of prior years	(25		)	(271		)	(706		)
Reductions due to settlements with taxing authorities	(1,423		)	(799		)	(1,936		)
Reductions due to statute of limitations expiration	(3,189		)	(910		)	(868		)
Balance at end of fiscal year	$	5,952		$	9,554		$	11,045

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of April 25, 2014, April 26, 2013 and April 27, 2012, was $5,652, $6,885 and $8,666, respectively. The remaining unrecognized tax benefits relate to tax positions for which ultimate deductibility is highly certain, but for which there is uncertainty as to the timing of such deductibility. Recognition of these tax benefits would not affect our effective tax rate

The Company believes that it is reasonable that a decrease of up to $1,200 in unrecognized tax benefits related to state exposures may be necessary in the coming year due to settlements with taxing authorities or lapses of statutes of limitations.

We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense in the Consolidated Statements of Net Income. During fiscal 2014, fiscal 2013 and fiscal 2012, we recognized approximately $204, $394 and $455, respectively, of interest and penalties in tax expense. As of April 25, 2014, and April 26, 2013, we had accrued approximately $1,005 and $1,762, respectively, in interest and penalties related to unrecognized tax benefits.

We file United States federal and various state and local income tax returns. During the fourth quarter of fiscal 2014, the IRS audit for fiscal years 2009 through 2011 was closed. Tax returns are generally subject to examination for a period of three to five years after the filing of the respective return.