Income Taxes

Deferred income taxes consist of the following:



(Dollars in Millions)	Jan 28, 2017		Jan 30, 2016
Deferred tax liabilities:
Property and equipment	$	1,226	$	1,319
Merchandise inventories	95		—
Total deferred tax liabilities	1,321		1,319
Deferred tax assets:
Capital lease and financing obligations	711		752
Accrued and other liabilities, including stock-based compensation	194		151
Accrued step rent liability	111		106
Federal benefit on state tax reserves	47		45
Unrealized loss on interest rate swap	9		11
Merchandise inventories	—		24
Total deferred tax assets	1,072		1,089
Net deferred tax liability	$	249	$	230

Deferred tax assets included in other long-term assets totaled $23 million as of January 28, 2017 and $27 million as of January 30, 2016.

The components of the provision for income taxes were as follows:



(Dollars in Millions)	2016		2015			2014
Current federal	$	272	$	397		$	400
Current state	25		34			36
Deferred federal	16		(35		)	48
Deferred state	6		(12		)	(2		)
Provision for income taxes	$	319	$	384		$	482

Our effective tax rate differs from the amount that would be provided by applying the federal statutory tax rate due to the following items:



	2016		2015		2014
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	2.4		2.1		1.3
Other federal tax credits	(0.9	)	(0.8	)	(0.6	)
Effective tax rate	36.5	%	36.3	%	35.7	%

We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. The only federal returns subject to examination are for the 2009 through 2016 tax years. State returns subject to examination vary depending upon the state. Generally, the 2013 through 2016 tax years are subject to state examination. The earliest open period is 2005. Certain states have proposed adjustments which we are currently appealing. If we do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position.

6. Income Taxes (continued)

A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:



(Dollars in Millions)	2016			2015
Balance at beginning of year	$	139		$	123
Increases due to:
Tax positions taken in prior years	3			16
Tax positions taken in current year	15			19
Decreases due to:
Tax positions taken in prior years	—			(6		)
Settlements with taxing authorities	(6		)	(10		)
Lapse of applicable statute of limitations	(2		)	(3		)
Balance at end of year	$	149		$	139

Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $29 million at January 28, 2017 and $23 million at January 30, 2016. We had $6 million in interest and penalty expense for 2016, none for 2015, and $2 million for 2014.

Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $110 million as of January 28, 2017 and $101 million as of January 30, 2016. It is reasonably possible that our unrecognized tax positions may change within the next 12 months, primarily as a result of ongoing audits. While it is possible that one or more of these examinations may be resolved in the next year, it is not anticipated that a significant impact to the unrecognized tax benefit balance will occur.

We have both payables and receivables for current income taxes recorded on our Balance Sheet. Receivables included in other current assets totaled $27 million as of January 28, 2017 and $26 million as of January 30, 2016.