Income Taxes

The table below provides, for the periods indicated, reconciliations of the Company’s effective tax rate from the federal statutory tax rate (amounts in thousands):



	Three months ended January 31,
	2014				2013
	$		%*		$		%*
Federal tax provision at statutory rate	24,932		35.0		2,914		35.0
State tax provision, net of federal benefit	2,985		4.2		346		4.2
Domestic production activities deduction	(1,833	)	(2.6	)
Other permanent differences	(1,014	)	(1.4	)
Valuation allowance – reversed	(448	)	(0.6	)	(216	)	(2.6	)
Accrued interest on anticipated tax assessments	786		1.1		1,166		14.0
Other	247		0.3		(316	)	(3.8	)
Income tax provision	25,655		36.0		3,894		46.8

* Due to rounding, amounts may not add.

The Company currently operates in 20 states and is subject to various state tax jurisdictions. The Company estimates its state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction, and the Company’s ability to utilize certain tax-saving strategies. Based on the Company’s estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on the Company’s tax strategies, the Company estimated its rate for state income taxes at 6.5% for fiscal 2014 and 2013.

For state tax purposes, due to past and projected losses in certain jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company has recognized net cumulative valuation allowances against its state deferred tax assets of $55.3 million and $55.7 million as of January 31, 2014 and October 31, 2013, respectively.