INCOME TAXES:

The income tax provision consisted of the following:



	Fiscal 2015			Fiscal 2014			Fiscal 2013

	(in thousands)
Current:
Federal	$	15,622		$	53,985		$	58,000
Foreign	210			124			12
State	1,683			7,152			7,557
Deferred:
Federal	(25,004		)	(6,550		)	8,479
State	(9,411		)	(2,911		)	1,752
Total income tax (benefit) provision	$	(16,900	)	$	51,800		$	75,800

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 2015, 2014, and 2013 was $(0.8) million, $(2.8) million, and $(0.6) million respectively.

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



	Fiscal 2015		Fiscal 2014		Fiscal 2013
Federal income tax rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal tax benefit	4.3		1.9		3.0
Goodwill impairment	(124.2	)	8.4		18.0
Outside basis difference - Boston Proper sale	165.2		—		—
Other state benefits associated with sale and liquidation of Boston Proper	20.1		—		—
Enhanced charitable contribution	19.3		(2.5	)	(1.8	)
Executive compensation limitation	(7.3	)	1.3		0.7
Foreign losses with full valuation allowance	(2.9	)	1.0		—
Federal tax credits	3.4		(0.7	)	(0.7	)
Other items, net	0.4		0.1		(0.7	)
Total	113.3	%	44.5	%	53.5	%

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 30, 2016 and January 31, 2015:



	January 30, 2016			January 31, 2015

	(in thousands)
Deferred tax assets:
Accrued liabilities and allowances	$	13,416		$	12,560
Accrued straight-line rent	19,716			19,034
Stock-based compensation	12,945			17,971
Property related	6,270			4,390
Charitable contribution limitation carryfowards	5,720			—
State tax credits and net operating loss carryforwards	5,384			1,575
Other	4,675			5,340
Total deferred tax assets	68,126			60,870
Valuation allowance	(911		)	(913		)
Net deferred tax assets	67,215			59,957

Deferred tax liabilities:
Other	(1,249		)	(1,611		)
Prepaid expenses	(4,099		)	(4,649		)
Property related	(50,601		)	(48,802		)
Other intangible assets	(23,200		)	(48,981		)
Total deferred tax liabilities	(79,149		)	(104,043		)
Net deferred	$	(11,934	)	$	(44,086	)

As of January 30, 2016, the Company had available for state income tax purposes net operating loss and tax credit carryovers which expire, if unused, in the years 2020 - 2035 and 2021 - 2025, respectively.

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 U.S. There were no significant undistributed earnings at January 30, 2016 and January 31, 2015.

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 30, 2016 or January 31, 2015.

A reconciliation of the beginning and ending amounts of uncertain tax positions for each of fiscal 2015, fiscal 2014 and fiscal 2013 is as follows:



	Fiscal 2015			Fiscal 2014			Fiscal 2013

	(in thousands)
Balance at beginning of year	$	2,532		$	3,956		$	4,715
Additions for tax positions of prior years	2,618			757			12
Reductions for tax positions of prior years	(56		)	(736		)	—
Additions for tax positions for the current year	259			390			461
Settlements with tax authorities	—			(1,501		)	(1,114		)
Reductions due to lapse of applicable statutes of limitation	(513		)	(334		)	(118		)
Balance at end of year	$	4,840		$	2,532		$	3,956

At January 30, 2016, January 31, 2015, and February 1, 2014, balances included $4.0 million, $1.6 million, and $2.6 million respectively, of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate in future periods. Included in the January 30, 2016 uncertain tax positions balance of $4.8 million is $1.6 million of unrecognized tax benefits that have been offset directly against the associated tax attributes.

Our continuing practice is to recognize potential accrued interest and penalties relating to unrecognized tax benefits in the income tax provision. For fiscal 2015, 2014 and 2013, we accrued $0.2 million, $0.3 million and $0.4 million, respectively for interest and penalties. We had approximately $0.4 million, $0.5 million and $2.3 million, respectively for the payment of interest and penalties accrued at January 30, 2016, January 31, 2015 and February 1, 2014, 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 2013 year has been examined and a full acceptance letter issued. For fiscal 2014, we have received a partial acceptance letter, and are currently in the post-file review process. Through the end of fiscal 2015, the majority of fiscal 2014 issues have been resolved with the exception of transfer pricing and the domestic production activities deduction.

With few exceptions, we are no longer subject to state and local examinations for years before fiscal 2011. Various state examinations are currently underway for fiscal periods spanning from 2010 through 2014; however, we do not expect any significant change to our uncertain tax positions within the next year.