INCOME TAXES:

The income tax provision consisted of the following:



	Fiscal 2014			Fiscal 2013		Fiscal 2012

	(in thousands)
Current:
Federal	$	53,985		$	58,000	$	95,410
Foreign	124			12		—
State	7,152			7,557		17,001
Deferred:
Federal	(6,550		)	8,479		(2,585		)
State	(2,911		)	1,752		(1,626		)
Total income tax provision	$	51,800		$	75,800	$	108,200

The foreign component of pre-tax income (loss), arising principally from operating foreign stores and other management and cost sharing charges we are required to allocate under U.S. tax law, for fiscal 2014, 2013, and 2012 was $(2.8) million, $(0.6) million, and $0.0 million respectively.

A reconciliation between the statutory federal income tax rate and the effective income tax rate follows:



	Fiscal 2014		Fiscal 2013		Fiscal 2012
Federal income tax rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal tax benefit	1.9		3.0		3.5
Goodwill impairment	8.4		18.0		—
Enhanced charitable contribution	(2.5	)	(1.8	)	(0.7	)
Other items, net	1.7		(0.7	)	(0.3	)
Total	44.5	%	53.5	%	37.5	%

Deferred tax assets and liabilities are recorded due to different carrying amounts for financial and income tax reporting purposes arising from cumulative temporary differences. These differences consist of the following as of January 31, 2015 and February 1, 2014:



	January 31, 2015			February 1, 2014

	(in thousands)
Deferred tax assets:
Accrued liabilities and allowances	$	12,560		$	10,694
Accrued straight-line rent	19,034			18,124
Stock-based compensation	17,971			18,388
Property related	4,390			—
Other	6,915			4,324
Total deferred tax assets	60,870			51,530
Valuation allowance	(913		)	(127		)
Net deferred tax assets	59,957			51,403

Deferred tax liabilities:
Other	(1,611		)	(1,148		)
Prepaid expenses	(4,649		)	(5,759		)
Property related	(48,802		)	(45,452		)
Other intangible assets	(48,981		)	(51,291		)
Total deferred tax liabilities	(104,043		)	(103,650		)
Net deferred	$	(44,086	)	$	(52,247	)

We have not recognized any United States (“U.S.”) tax expense on undistributed foreign earnings as they are intended to be indefinitely reinvested outside of the United States. There were no significant undistributed earnings at January 31, 2015 and February 1, 2014. Accumulated other comprehensive income is shown net of deferred tax assets and deferred tax liabilities. These deferred taxes are not reflected in the table above. The amount is not significant at January 31, 2015 or February 1, 2014.

A reconciliation of the beginning and ending amounts of uncertain tax positions for each of fiscal 2014, fiscal 2013 and fiscal 2012 is as follows:



	Fiscal 2014			Fiscal 2013			Fiscal 2012

	(in thousands)
Balance at beginning of year	$	3,956		$	4,715		$	3,677
Additions for tax positions of prior years	757			12			506
Reductions for tax positions of prior years	(736		)	—			—
Additions for tax positions for the current year	390			461			694
Settlements with tax authorities	(1,501		)	(1,114		)	(63		)
Reductions due to lapse of applicable statutes of limitation	(334		)	(118		)	(99		)
Balance at end of year	$	2,532		$	3,956		$	4,715

Included in the January 31, 2015, February 1, 2014, and February 2, 2013 balances were $1.6 million, $2.6 million, and $3.1 million respectively, of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate in future periods.

Our continuing practice is to recognize potential accrued interest and penalties relating to unrecognized tax benefits in the income tax provision. For fiscal 2014, 2013 and 2012, we accrued $0.3 million, $0.4 million and $0.4 million, respectively for interest and penalties. We had approximately $0.5 million, $2.3 million and $2.4 million, respectively for the payment of interest and penalties accrued at January 31, 2015, February 1, 2014 and February 2, 2013, respectively. The amounts included in the reconciliation of uncertain tax positions do not include accruals for interest and penalties.

In fiscal 2006, we began participating in the IRS’s real time audit program, Compliance Assurance Process (“CAP”). Under the CAP program, material tax issues and initiatives are disclosed to the IRS throughout the year with the objective of reaching agreement as to the proper reporting treatment when the federal return is filed. Our fiscal 2012 year has been examined and a full acceptance letter issued. For fiscal 2013, all issues have been resolved during the post-file review process and we are awaiting a full acceptance letter.

With few exceptions, we are no longer subject to state and local examinations for years before fiscal 2010. Various state examinations are currently underway for fiscal periods spanning from 2009 through 2013; however, we do not expect any significant change to our uncertain tax positions within the next year.