Entity information:
Income Taxes
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Income tax benefits associated with net operating losses of, in thousands, $2,256 expire from fiscal year 2017 to 2036. Income tax benefits associated with tax credit carryforwards of, in thousands, $2,067, expire from fiscal year 2022 to 2028. A valuation allowance was provided as of June 30, 2017 for deferred tax assets relating to state net operating losses of, in thousands, $643 that we currently believe are more likely than not to remain unrealized in the future.
The components of the deferred tax assets and liabilities as of June 30, 2017 and 2016, were as follows:
(Amounts in Thousands)
2017
 
2016
Deferred Tax Assets:
 

 
 

Receivables
$
1,152

 
$
1,254

Inventory
819

 
384

Employee benefits
563

 
485

Deferred compensation
13,254

 
11,348

Other current liabilities
446

 
504

Warranty reserve
775

 
915

Tax credit carryforwards
1,982

 
2,492

Sale-leaseback
1,507

 
—

Restructuring
31

 
176

Net operating loss carryforward
2,256

 
2,630

Miscellaneous
2,251

 
2,366

Valuation Allowance
(643
)
 
(687
)
Total asset
$
24,393

 
$
21,867

Deferred Tax Liabilities:
 
 
 
Property and equipment
$
9,203

 
$
8,483

Capitalized software
—

 
31

Miscellaneous
703

 
563

Total liability
$
9,906

 
$
9,077

Net Deferred Tax Assets
$
14,487

 
$
12,790


The provision for income taxes from continuing operations is composed of the following items:
 
Year Ended June 30
(Amounts in Thousands)
2017
 
2016
 
2015
Currently Payable:
 

 
 

 
 

Federal
$
19,780

 
$
7,548

 
$
4,553

State
2,318

 
1,184

 
885

Total current
$
22,098

 
$
8,732

 
$
5,438

Deferred Taxes:
 

 
 

 
 

Federal
$
(1,761
)
 
$
3,081

 
$
616

State
175

 
421

 
482

Total deferred
$
(1,586
)
 
$
3,502

 
$
1,098

Total provision for income taxes from continuing operations
$
20,512

 
$
12,234

 
$
6,536



A reconciliation of the statutory U.S. income tax rate from continuing operations to Kimball International’s effective income tax rate follows:
 
Year Ended June 30
 
2017
 
2016
 
2015
(Amounts in Thousands)
Amount
 
%
 
Amount
 
%
 
Amount
 
%
Tax provision computed at U.S. federal statutory rate
$
20,306

 
35.0
 %
 
$
11,686

 
35.0
 %
 
$
6,188

 
35.0
 %
State income taxes, net of federal income tax benefit
1,620

 
2.8

 
1,043

 
3.1

 
662

 
3.7

Domestic manufacturing deduction
(1,495
)
 
(2.6
)
 
(286
)
 
(0.9
)
 
(602
)
 
(3.4
)
Research credit
(218
)
 
(0.4
)
 
(346
)
 
(1.0
)
 
(218
)
 
(1.2
)
Spin-off costs
—

 
—

 
—

 
—

 
784

 
4.4

Unrecognized tax benefit
—

 
—

 
—

 
—

 
(851
)
 
(4.8
)
Other - net
299

 
0.6

 
137

 
0.4

 
573

 
3.3

Total provision for income taxes from continuing operations
$
20,512

 
35.4
 %
 
$
12,234

 
36.6
 %
 
$
6,536

 
37.0
 %

Net cash payments for income taxes were, in thousands, $20,881, $7,963, and $13,306 in fiscal years 2017, 2016, and 2015, respectively.
Changes in the unrecognized tax benefit, excluding accrued interest and penalties, during fiscal years 2017, 2016, and 2015 were as follows:
(Amounts in Thousands)
2017
 
2016
 
2015
Beginning balance - July 1
$
2,077

 
$
1,920

 
$
2,692

Tax positions related to prior fiscal years:
 

 
 

 
 

Additions
213

 
301

 
351

  Reductions
(581
)
 
(43
)
 
—

Tax positions related to current fiscal year:
 

 
 

 
 

Additions
391

 
—

 
—

Reductions
—

 
—

 
—

Settlements
—

 
—

 
—

Lapses in statute of limitations
(212
)
 
(101
)
 
(1,123
)
Ending balance - June 30
$
1,888

 
$
2,077

 
$
1,920

Portion that, if recognized, would reduce tax expense and effective tax rate
$
1,377

 
$
1,407

 
$
1,307


We recognize interest and penalties related to unrecognized tax benefits in the Provision for Income Taxes line of the Consolidated Statements of Income. Amounts accrued for interest and penalties were as follows:
 
As of June 30
(Amounts in Thousands)
2017
 
2016
 
2015
Accrued Interest and Penalties:
 

 
 

 
 

Interest
$
84

 
$
102

 
$
104

Penalties
$
102

 
$
108

 
$
105


Interest and penalties income (expense) recognized for fiscal years 2017, 2016, and 2015 were, in thousands, $23, $(1), and $171, respectively.
Kimball International, or one of its wholly-owned subsidiaries, files U.S. federal income tax returns and income tax returns in various state and local jurisdictions. We are no longer subject to any significant U.S. federal tax examinations by tax authorities for years before fiscal year 2014, and to various state and local income tax examinations by tax authorities for years before 2007. We do not expect the change in the amount of unrecognized tax benefits in the next 12 months to have a significant impact on our results of operations or financial position.