8. INCOME TAXES:

The income tax provision consisted of the following:


	Fiscal 2011		Fiscal 2010		Fiscal 2009
Current:
Federal	$	52,245	$	29,809	$	30,555
State		11,366		1,106		3,998
Deferred:
Federal		17,991		28,623		5,451
State		1,498		3,862		196
Total income tax provision	$	83,100	$	63,400	$	40,200

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


	Fiscal 2011		Fiscal 2010		Fiscal 2009
Federal income tax rate	35.0	%	35.0	%	35.0	%
State income tax, net of federal tax benefit	3.7		1.8		2.5
Other items, net	(1.6	)	(1.3	)	(0.9	)
Total	37.1	%	35.5	%	36.6	%

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 28, 2012 and January 29, 2011:


	January 28, 2012			January 29, 2011
	January 28, 2012			January 29, 2011
Current deferred tax assets:
Accrued liabilities and allowances	$	11,840		$	11,161
Other, net		2,424			1,642
		14,264			12,803
Noncurrent deferred tax assets:
Accrued liabilities and allowances		2,128			2,105
Accrued straight-line rent		16,784			16,980
Stock-based compensation		13,779			10,915
Other, net		3,329			3,228
		36,020			33,228
Total deferred tax assets		50,284			46,031
Current deferred tax liabilities:
Inventories		(5,699	)		(1,827	)
		(5,699	)		(1,827	)
Noncurrent deferred tax liabilities:
Property related, net		(33,692	)		(14,160	)
Other intangible assets		(54,453	)		(18,104	)
		(88,145	)		(32,264	)
Total deferred tax liabilities	$	(93,844	)	$	(34,091	)

A reconciliation of the beginning and ending amounts of uncertain tax positions for each of fiscal 2011 and fiscal 2010 is as follows:


	Fiscal 2011			Fiscal 2010

Balance at beginning of year	$	3,628		$	6,886
Additions for tax positions of prior years		167			278
Reductions for tax positions of prior years		(81	)		(2,612	)
Additions for tax positions for the current year		442			335
Reductions for tax positions for the current year		–			–
Settlements with tax authorities		(306	)		(1,172	)
Reductions due to lapse of applicable statutes of limitation		(173	)		(87	)
Balance at end of year	$	3,677		$	3,628

Included in each of the January 28, 2012 and January 29, 2011 balances was $2.4 million 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. In both fiscal 2011 and 2010, we accrued $0.4 million for interest and penalties. We had approximately $2.1 million for the payment of interest and penalties accrued at both January 28, 2012 and January 29, 2011. 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 2009 year has been examined and a full acceptance letter issued. Our fiscal 2010 year has been examined and a partial acceptance letter issued. All issues have been resolved during the post-file review process and we are awaiting a full acceptance letter. During the year, our fiscal 2006 year return was subjected to a limited review due to the filing of a Telephone Excise Tax Refund (TETR) claim and no additional changes were made.)

With few exceptions, we are no longer subject to state and local examinations for years before fiscal 2008. Various state examinations are currently underway for fiscal periods spanning from 2003 through 2009; however, we do not expect any significant change to our uncertain tax positions within the next year.