Note 11. Income Taxes

A reconciliation of the difference between the provision for income taxes computed at statutory rates and the provision for income taxes provided in the Consolidated Statements of Comprehensive Income is as follows:

	2013			2012			2011

Statutory federal rate		35.0	%		35.0	%		34.4	%
State taxes, net of federal benefit		2.9			2.6			2.1
Non-deductible expenses		0.5			0.5			1.0
Other		0.2			0.4			(1.9	)
Effective rate		38.6	%		38.5	%		35.6	%

The provision for income taxes was comprised of the following:

	2013			2012		2011

Federal:Current	$	10,593,200		$	8,598,000	$	5,493,000
Deferred		(929,600	)		612,500		(581,400	)
State:Current		1,640,400			1,007,700		676,100
Deferred		(103,500	)		55,800		(51,000	)
Provision for income taxes	$	11,200,500		$	10,274,000	$	5,536,700

Total deferred tax assets and deferred tax liabilities as of March 31, 2013 and April 1, 2012, and the sources of the differences between financial accounting and tax basis of the Company's assets and liabilities which give rise to the deferred tax assets and liabilities are as follows:

	2013		2012
Deferred tax assets:
Deferred compensation	$	1,448,900	$	1,571,700
Accrued vacation		435,400		416,600
Deferred rent		1,070,000		941,700
Allowance for doubtful accounts		448,800		312,800
Inventory reserves		1,254,000		1,126,200
Sales tax reserves		618,300		646,400
Other assets		951,900		546,100
Total deferred tax assets	$	6,227,300	$	5,561,500

Deferred tax liabilities:
Depreciation and amortization	$	3,373,100	$	3,773,000
Accrued compensation		--		320,400
Prepaid expenses		429,100		422,500
Other liabilities		149,600		154,000
Total deferred tax liabilities	$	3,951,800	$	4,669,900

The Company has reviewed its deferred tax assets realization and has determined that no valuation allowance is required as of March 31, 2013 or April 1, 2012.

As of March 31, 2013, the gross amount of unrecognized tax benefits was $631,100 ($416,500 - net of federal benefit). As of April 1, 2012, the Company had gross unrecognized tax benefits of $561,600 ($370,600 - net of federal benefit).

The Company's accounting policy with respect to interest and penalties related to tax uncertainties is to classify these amounts as income taxes. The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of comprehensive income for fiscal year 2013 was $71,280 (net of federal benefit) and the cumulative amount included in the consolidated balance sheet as of March 31, 2013 was $309,000 (net of federal benefit). The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of comprehensive income for fiscal year 2012 was $33,500 (net of federal benefit) and the cumulative amount included in the consolidated balance sheet as of April 1, 2012 was $236,600 (net of federal benefit). The total amount of interest and penalties related to tax uncertainties recognized in the consolidated statement of comprehensive income for fiscal year 2011 was $59,000 (net of federal benefit) and the total amount included in the consolidated balance sheet as March 27, 2011of was $203,100 (net of federal benefit).

As of March 31, 2013, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $725,500. The Company does not expect any material changes in unrecognized tax benefits over the next 12 months.

A reconciliation of the changes in the gross balance of unrecognized tax benefit amounts, net of interest, is as follows:

	2013		2012		2011
Beginning balance of unrecognized tax benefit	$	561,600	$	453,800	$	696,000
Increases related to prior period tax positions		--		--		92,200
Increases related to current period tax positions		69,500		107,800		--
Reductions as a result of a lapse in the applicable statute of limitations		--		--		(334,400	)
Ending balance of unrecognized tax benefits	$	631,100	$	561,600	$	453,800

The Company files income tax returns in U.S. federal, state and local jurisdictions. Income tax returns filed for fiscal years 2008 and earlier are no longer subject to examination by U.S. federal, state and local tax authorities. No federal, state and local income tax returns are currently under examination, except for a Texas income tax audit for the 2008 and 2009 tax years. Certain income tax returns for fiscal years 2009 through 2011 remain open to examination by U.S. federal, state and local tax authorities.