12. INCOME TAXES

The components of the provision (benefit) for income taxes from continuing operations are as follows:


	July 31,
Income Taxes:	2017			2016			2015
Federal	$	200,370		$	126,846		$	98,504
State and local		20,941			12,716			1,222

Total current expense		221,311			139,562			99,726


Federal		(37,033	)		(13,079	)		(7,785	)
State and local		(2,146	)		(1,192	)		(1,055	)

Total deferred (benefit)		(39,179	)		(14,271	)		(8,840	)


Total income tax expense	$	182,132		$	125,291		$	90,886

The differences between income taxes at the federal statutory rate and the actual income taxes are as follows:


	July 31,
	2017			2016			2015
Provision at federal statutory rate	$	194,735		$	134,160		$	102,513
State and local income taxes, net of federal benefit		11,021			6,599			5,144
Federal income tax credits and incentives		(3,228	)		(4,194	)		(2,207	)
Domestic production activities deduction		(19,527	)		(12,609	)		(9,519	)
Change in uncertain tax positions		375			611			(5,650	)
Other		(1,244	)		724			605

Total income tax expense	$	182,132		$	125,291		$	90,886

A summary of deferred income taxes is a follows:


	July 31,
	2017			2016
Deferred income tax asset (liability):
Inventory basis	$	1,460		$	1,196
Employee benefits		6,471			4,587
Self-Insurance Reserves		9,940			10,504
Accrued product warranties		73,393			43,388
Accrued incentives		6,175			5,154
Sales returns and allowances		2,340			1,642
Accrued expenses		3,399			2,607
Property, plant and equipment		(8,151	)		(4,164	)
Deferred compensation		14,556			9,145
Intangibles		(17,184	)		(22,308	)
Unrecognized tax benefits		3,925			4,105
Other		(3,355	)		(2,439	)

Deferred income tax asset, net	$	92,969		$	53,417

As of July 31, 2017, the Company has $1,882 of state tax credit carry forwards that expire from fiscal 2026-2027 which the Company expects to realize prior to expiration. In addition, the Company has $8,973 of gross state tax Net Operating Loss (“NOL”) carry forwards that expire from fiscal 2018-2037 that the Company does not expect to realize and therefore has been fully reserved. The deferred tax asset of $422 associated with the state tax NOL carry forwards and the related equal and offsetting valuation allowance are not reflected in the table above.

Unrecognized Tax Benefits:

The benefits of tax positions reflected on income tax returns but whose outcome remains uncertain are only recognized for financial accounting purposes if they meet minimum recognition thresholds. The total amount of unrecognized tax benefits that, if recognized, would have impacted the Company’s effective tax rate were $8,477 for fiscal 2017, $8,886 for fiscal 2016 and $8,764 for fiscal 2015.

Changes in the unrecognized tax benefit during fiscal years 2017, 2016 and 2015 were as follows:


	2017			2016			2015
Beginning balance	$	13,269		$	13,156		$	20,813
Tax positions related to prior years:
Additions		75			1,546			126
Reductions		(1,510	)		(920	)		(7,695	)
Tax positions related to current year:
Additions		3,853			3,123			2,858
Settlements		(1,450	)		(956	)		(1,898	)
Lapses in statute of limitations		(1,566	)		(2,680	)		(1,048	)

Ending balance	$	12,671		$	13,269		$	13,156

It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. The total amount of liabilities accrued for interest and penalties related to unrecognized tax benefits as of July 31, 2017 and 2016 were $1,209 and $1,547, respectively. The total amount of interest and penalties benefit recognized in the Consolidated Statements of Income and Comprehensive Income for the fiscal years ended July 31, 2017, 2016 and 2015 were $218, $231 and $2,552, respectively.

The total unrecognized tax benefits above, along with the related accrued interest and penalties, are reported within the liability section of the Consolidated Balance Sheets. A portion of the unrecognized tax benefits is classified as short-term and is included in the “Income and other taxes” line of the Consolidated Balance Sheets, while the remainder is classified as a long-term liability.

The components of total unrecognized tax benefits are summarized as follows:


	July 31,
	2017			2016
Unrecognized tax benefits	$	12,671		$	13,269
Reduction to unrecognized tax benefits for tax credit carry forward		(1,882	)		(2,255	)
Accrued interest and penalties		1,209			1,547

Total unrecognized tax benefits	$	11,998		$	12,561


Short-term, included in “Income and other taxes”	$	1,735		$	2,586
Long-term		10,263			9,975

Total unrecognized tax benefits	$	11,998		$	12,561

The Company anticipates a decrease of approximately $3,950 in unrecognized tax benefits and $500 in interest during fiscal 2018 from expected settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations. Actual results may differ from these estimates.

Generally, fiscal years 2015 and 2016 remain open for federal income tax purposes and fiscal years 2013, 2014, 2015 and 2016 remain open for state and Canadian income tax purposes. The Company and its subsidiaries file a consolidated U.S. federal income tax return and multiple state income tax returns. The Company is currently under exam by various state authorities for the fiscal years ended July 31, 2013 through 2015. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions related to its state income tax returns in its liability for unrecognized tax benefits.