16. INCOME TAXES

Components of the income tax (benefit) provision were as follows:

	2015			2014			2013
Current:
Federal	$	—		$	—		$	—
State		—			(99	)		(332	)

Total current		—			(99	)		(332	)

Deferred:
Federal		(2,132	)		1,360			191
State		257			358			57

Total deferred		(1,875	)		1,718			248

Income tax (benefit) provision	$	(1,875	)	$	1,619		$	(84	)

Components of gross deferred tax assets and liabilities were as follows:

	January 30, 2016			January 31, 2015
Deferred tax assets:
Net operating losses	$	79,154		$	56,571
General business tax credits		7,609			5,969
Alternative minimum tax credits		5,529			5,529
Defined benefit pension obligations		20,099			25,445
Accrued expenses		7,283			7,781
Inventories		1,660			812
Equity compensation		2,878			2,255
Rent amortization		40,831			39,844
Capital leases		52,520			18,995
Deferred revenue		15,831			17,827
Other		8,291			8,567

Gross deferred tax assets		241,685			189,595
Less: Valuation allowance		(186,582	)		(161,856	)

Net deferred tax assets		55,103			27,739

Deferred tax liabilities:
Property, fixtures and equipment		(50,876	)		(23,127	)
Trade names		(9,768	)		(8,697	)
Other		(4,227	)		(4,612	)

Total gross deferred tax liabilities		(64,871	)		(36,436	)

Net deferred tax liabilities	$	(9,768	)	$	(8,697	)

ASC 740 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence using a "more likely than not" standard. In assessing the realizability of its deferred tax assets, the Company considered whether it was more likely than not that its deferred tax assets will be realized based upon all available evidence, including the scheduled reversal of deferred tax liabilities, historical operating results, projected future operating results, tax carry-back availability and limitations pursuant to Section 382 of the Internal Revenue Code ("Section 382"), among others. Pursuant to ASC 740, significant weight is to be given to evidence that can be objectively verified. As a result, a company's current or previous losses are given more weight than any projected future taxable income. In addition, a recent three-year historical cumulative loss is considered a significant element of negative evidence that is difficult to overcome.

The Company has evaluated its deferred tax assets each reporting period, including assessment of its cumulative income or loss over the prior three-year period, to determine if valuation allowances were required. With respect to reviews during 2015, 2014 and 2013, the Company's three-year historical cumulative loss and the continuation of uncertain near-term economic conditions impeded the Company's ability to rely on its projections of future taxable income in assessing valuation allowance requirements. As such, the Company concluded that it was necessary to maintain a full valuation allowance on its net deferred tax assets. If actual results differ from the Company's underlying estimates, or these estimates are adjusted in future periods, the Company may need to adjust its valuation allowance—which could materially impact its financial position and results of operations.

If sufficient positive evidence arises in the future indicating that all or a portion of the deferred tax assets meet the more likely than not standard for realization under ASC 740, the valuation allowance would be reduced accordingly in the period that such a conclusion is reached.

As a result of the partial tax benefit allocated to the loss from continuing operations, the changes recognized within OCI were reported on a net-of-tax basis in 2015. As a result of the full deferred tax asset valuation allowance maintained throughout 2014 and 2013, the changes recognized within OCI were recorded on a gross basis, with the exception of the tax benefit recorded for the loss in continuing operations in the fourth quarter of 2013 (discussed below).

At January 30, 2016, the Company had federal and state net operating loss carry-forwards of $158,030 and $423,813, respectively, which are available to offset future federal and state taxable income, subject to certain limitations imposed by Section 382. These net operating losses will expire in various years from 2016 through 2035.

The Company had carry-forwards for general business tax credits of $7,609 and $5,969 as of January 30, 2016 and January 31, 2015, respectively. These credits will expire in various years from 2028 through 2035.

The Company had carry-forwards for alternative minimum tax credits of $5,529 as of January 30, 2016 and January 31, 2015. The Company acquired $2,064 of these credits in connection with an acquisition; their use is subject to the limitations imposed by Section 382. These credits can be carried-forward indefinitely.

Pursuant to ASC 740, the Company is required to consider all income items (including items recorded in OCI) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, in 2015 the Company recorded a net income tax benefit of $1,875 which includes a $2,946 non-cash income tax benefit from continuing operations. Since OCI was also a loss in 2014, no tax benefit was allocated to continuing operations that year. In 2013 the Company recorded a net income tax benefit of $84 which includes a $1,486 non-cash income tax benefit from continuing operations. In each of 2015 and 2013, the income tax benefit on the loss from continuing operations is exactly offset by income tax expense on OCI. However, while the income tax benefit from continuing operations is reported in the consolidated statement of operations, the income tax expense on OCI is recorded directly to AOCI, which is a component of shareholders' equity. Because the income tax expense on OCI is equal to the income tax benefit from continuing operations in those years, the Company's year-end net deferred tax position is not impacted by this tax allocation. The resulting residual income tax expense will remain in AOCI until all amounts in AOCI that relate to the plan or program that gave rise to the residual income taxes are recognized in the consolidated statement of operations. The Company will reclassify to earnings all residual tax amounts relating to its pension and retiree medical liability in the period in which these plans or programs are terminated.

A reconciliation of the tax (benefit) provision to the tax at the statutory federal income rate is as follows:

	2015			2014			2013
Tax benefit at statutory rate	$	(20,625	)	$	(1,874	)	$	(1,274	)
State income taxes, net of federal benefit		(3,879	)		(1,865	)		(59	)
Valuation allowance changes, net		26,062			4,684			1,728
Tax benefit resulting from OCI allocation		(2,946	)		—			(1,486	)
Tax credits		(677	)		(534	)		(553	)
Nondeductible expenses		256			1,031			1,550
Changes in state deferred tax rate		(107	)		178			11
Other, net		41			(1	)		(1	)

Tax (benefit) provision at effective rate	$	(1,875	)	$	1,619		$	(84	)

In accordance with ASC 740, 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. A reconciliation of the beginning and ending gross unrecognized tax benefits is as follows:

	2015		2014			2013
Balance at beginning of year	$	9,064	$	9,162		$	9,339
Decreases related to prior year tax positions		—		(19	)		—
Lapse of statute		—		(79	)		(177	)

Balance at end of year	$	9,064	$	9,064		$	9,162

The total amount of gross unrecognized tax benefits that, if recognized, would impact the effective tax rate was $0 as of January 30, 2016 and January 31, 2015. The gross unrecognized tax benefits are not expected to significantly increase or decrease during 2016.

It is the Company's policy to record interest and penalties on unrecognized tax benefits as an income tax provision. For 2015, the Company did not record any interest or penalty on unrecognized tax benefits. For 2014, the Company recorded $6 as an income tax provision, offset by a $26 reduction of accrued interest due to a statute expiration. For 2013, the Company recorded $17 as an income tax provision, offset by a $63 reduction of accrued interest due to a statute expiration. At each of January 30, 2016 and January 31, 2015, the Company did not have any accruals for interest and penalties on unrecognized tax benefits.

The Company's federal tax returns for the years ended February 2, 2013 through the present are open to examination, as are the Company's various state tax returns for the years ended January 28, 2012 through the present.