Income Taxes

Components of income tax expense for the fiscal years indicated were as follows (in millions):



	2014			2013			2012
Current federal income tax	$	359		$	321		$	234
Current state income tax	82			73			53
Current foreign income tax	2			3			4
Total current tax	443			397			291
Deferred federal income tax	(66		)	(44		)	1
Deferred state income tax	(10		)	(10		)	(6		)
Deferred foreign income tax	—			—			—
Total deferred tax	(76		)	(54		)	(5		)
Total income tax expense	$	367		$	343		$	286

Actual income tax expense for the fiscal years indicated differed from the amount computed by applying statutory corporate income tax rates to income before income taxes as follows (in millions):



	2014			2013			2012
Federal income tax based on statutory rates	$	331		$	313		$	263
Increase (reduction) in income taxes resulting from:
Tax-exempt interest	(1		)	(1		)	(1		)
Excess charitable contributions	(8		)	(7		)	(5		)
Federal income tax credits	(3		)	(2		)	(2		)
Other, net	2			—			1
Total federal income taxes	321			303			256
State income taxes, net of federal income tax benefit	47			41			31
Tax impact of foreign operations	(1		)	(1		)	(1		)
Total income tax expense	$	367		$	343		$	286

Current income taxes receivable totaled approximately $1 million and $7 million at September 28, 2014 and September 29, 2013, respectively.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows (in millions):



	September 28, 2014			September 29, 2013
Deferred tax assets:
Compensation-related costs	$	159		$	122
Insurance-related costs	53			48
Inventories	—			1
Lease and other termination accruals	13			15
Rent differential	156			139
Tax basis of fixed assets in excess of book basis	9			7
Net domestic and international operating loss carryforwards	20			18
Other	8			5
Gross deferred tax assets	418			355
Valuation allowance	(30		)	(26		)
Deferred tax assets	388			329
Deferred tax liabilities:
Financial basis of fixed assets in excess of tax basis	(79		)	(102		)
Inventories	(5		)	—
Capitalized costs expensed for tax purposes	(4		)	(4		)
Deferred tax liabilities	(88		)	(106		)
Net deferred tax asset	$	300		$	223

Deferred taxes have been classified on the Consolidated Balance Sheets as follows (in millions):



	September 28, 2014		September 29, 2013
Current assets	$	168	$	151
Noncurrent assets	132		72
Net deferred tax asset	$	300	$	223

At September 28, 2014, the Company had international operating loss carryforwards totaling approximately $101 million, all of which have an indefinite life. The Company provided a valuation allowance totaling approximately $30 million for deferred tax assets associated with international operating loss carryforwards, federal credit carryforwards, and deferred tax assets associated with unrecognized tax benefits, for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes that it is more likely than not that we will fully realize the remaining domestic deferred tax assets in the form of future tax deductions based on the nature of these deductible temporary differences and a history of profitable operations.

The Company intends to utilize earnings in foreign operations for an indefinite period of time, or to repatriate such earnings only when tax-efficient to do so. If these amounts were distributed to the United States, in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, is dependent on circumstances existing if and when remittance occurs. The Company’s total gross unrecognized tax benefits are classified in the “Other long-term liabilities” line item on the Consolidated Balance Sheets and were not material during the last three fiscal years.

The Company and its domestic subsidiaries file income tax returns with federal, state and local tax authorities within the United States. The Company’s foreign affiliates file income tax returns in Canada and the United Kingdom. The Internal Revenue Service of the United States completed its examination of the Company’s federal tax returns for fiscal year 2012 during the first quarter of fiscal year 2014. With limited exceptions, the Company is no longer subject to federal income tax examinations for fiscal years before 2013 and is no longer subject to state and local income tax examinations for fiscal years before 2008.