Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income tax expense consisted of the following (in thousands):

The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate:



	2016		2015		2014
Statutory federal income tax	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	2.6		3.0		2.5
Manufacturing deduction	(3.3	)	(1.7	)	(3.3	)
Changes in unrecognized tax benefits	1.2		0.3		0.3
Non-taxable acquisition-related transactions	—		(2.6	)	—
Other	(3.2	)	(1.0	)	(1.1	)
Effective income tax rate	32.3	%	33.0	%	33.4	%

The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):



	2016			2015
Deferred tax assets:
Stock-based compensation	$	9,834		$	8,756
Deferred rent and lease incentives	8,388			6,977
Warranty and returns liabilities	7,948			10,817
Net operating loss carryforwards and credits	6,368			7,847
Compensation and benefits	4,115			3,788
Other	5,264			4,561
Total gross deferred tax assets	41,917			42,746
Valuation allowance	(620		)	(1,441		)
Total deferred tax assets after valuation allowance	41,297			41,305
Deferred tax liabilities:
Property and equipment	27,049			26,330
Deferred revenue	3,279			5,598
Other	6,302			6,341
Total gross deferred tax liabilities	36,630			38,269
Net deferred tax assets	$	4,667		$	3,036

Reconciliations of the beginning and ending amounts of unrecognized tax benefits for 2016, 2015 and 2014 were as follows (in thousands):



	Federal and State Tax
	2016			2015			2014
Beginning balance	$	2,077		$	742		$	474
Increases related to current-year tax positions	326			1,277			172
Increases related to prior-year tax positions	1,594			113			110
Lapse of statute of limitations	(333		)	(55		)	(14		)
Settlements with taxing authorities	(204		)	—			—
Ending balance	$	3,460		$	2,077		$	742