INCOME TAXES

Income tax expense attributable to earnings consisted of the following components:



	Years ended April 30,
	2016		2015		2014
Current tax expense
Federal	$	58,273	$	49,593	$	44,078
State	8,959		7,093		5,657
	67,232		56,686		49,735
Deferred tax expense	55,492		44,711		17,089
Total income tax expense	$	122,724	$	101,397	$	66,824

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:



	As of April 30,
	2016			2015
Deferred tax assets
Accrued liabilities and reserves	$	11,522		$	8,593
Property and equipment depreciation	15,914			12,846
Workers compensation	10,540			9,536
Deferred compensation	6,696			6,653
Equity compensation	5,186			3,767
State net operating losses & tax credits	973			626
Other	1,582			1,787
Total gross deferred tax assets	52,413			43,808
Less valuation allowance	84			228
Total net deferred tax assets	52,329			43,580
Deferred tax liabilities
Property and equipment depreciation	(425,586		)	(363,965		)
Goodwill	(21,677		)	(18,319		)
Other	—			(738		)
Total gross deferred tax liabilities	(447,263		)	(383,022		)
Net deferred tax liability	$	(394,934	)	$	(339,442	)

At April 30, 2016, the Company had net operating loss carryforwards for state income tax purposes of approximately $65,241, which are available to offset future state taxable income. These net operating loss carryforwards expire during the years 2020 through 2035. In addition, the Company had state alternative minimum tax credit carryforwards of approximately $167, which are available to reduce future state regular income taxes over an indefinite period.

There was a valuation allowance of $84 and $228 for state net operating loss deferred tax assets as of April 30, 2016 and 2015. The change in the valuation allowance was $(144) and $228 for the years ending April 30, 2016 and 2015, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the 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 taxable income, and tax planning strategies in making this assessment.

Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have resulted from applying the statutory U.S. federal income tax rates to income before income taxes. Out of period adjustments of $2,760 were recorded in fiscal 2014.



	Years ended April 30,
	2016		2015		2014
Income taxes at the statutory rates	35.0	%	35.0	%	35.0	%
Federal tax credits	(1.7	)%	(1.7	)%	(2.1	)%
State income taxes, net of federal tax benefit	2.7	%	3.1	%	3.2	%
Out of period adjustments	—	%	—	%	(1.4	)%
Other	(0.8	)%	(0.4	)%	(0.2	)%
	35.2	%	36.0	%	34.5	%

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had a total of $6,484 and $8,043 in gross unrecognized tax benefits at April 30, 2016 and 2015, respectively, which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $4,251 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits decreased $1,559 during the twelve months ended April 30, 2016, due primarily to the expiration of certain statute of limitations exceeding the increase associated with income tax filing positions for the current year.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2016			2015
Beginning balance	$	8,043		$	9,244
Additions based on tax positions related to current year	1,084			1,186
Additions for tax positions of prior years	26			13
Reductions for tax positions of prior years	—			—
Reductions due to lapse of applicable statute of limitations	(2,669		)	(2,400		)
Settlements	—			—
Ending balance	$	6,484		$	8,043

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $217 and $152 at April 30, 2016 and 2015, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax expense for the twelve month period ended April 30, 2016 was an increase in tax expense of $65 and a decrease of $250 for the year ended April 30, 2015.

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. The State of Illinois is examining tax years 2011 and 2012. Additionally, the IRS is currently examining tax year 2012. The Company has no other ongoing federal or state income tax examinations. The Company does not have any outstanding litigation related to tax matters.

At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is a decrease of $3,198 during the next twelve months mainly due to the expiration of certain statute of limitations. The federal statute of limitations remains open for the years 2012 and forward. Tax years 2011 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

In the quarter ended April 30, 2016, the Company adopted the provisions of ASU 2015-17, Balance Sheet Classification of Deferred Taxes, on a prospective basis. The guidance requires that all deferred tax assets and deferred tax liabilities be classified as noncurrent on the balance sheet. Prior periods have not been adjusted upon adoption.