Entity information:
NOTE 15 – INCOME TAXES

Our provision for income taxes was as follows for the periods indicated:

   
Fifty-Two
    
Fifty-Two
    
Fifty-Two
  
   
Weeks Ended
    
Weeks Ended
    
Weeks Ended
  
   
January 29,
    
January 31,
    
February 1,
  
   
2017
    
2016
    
2015
  
Current expense
                  
      Federal
  
$
14,470
    
$
7,196
    
$
6,024
  
      Foreign
    
86
      
41
      
40
  
      State
    
1,471
      
771
      
635
  
         Total current expense
    
16,027
      
8,008
      
6,699
  
                         
Deferred taxes
                        
      Federal
    
(2,427
)
    
244
      
97
  
      State
    
(216
)
    
22
      
24
  
      Valuation Allowance
    
525
      
0
      
0
  
         Total deferred taxes
    
(2,118
)
    
266
      
121
  
            Income tax expense
  
$
13,909
    
$
8,274
    
$
6,820
  

Total tax expense for fiscal 2017 was $14.1 million, of which $13.9 million was allocated to continuing operations and $204,000 was allocated to other comprehensive income. Total tax expense for fiscal 2016 was $8.6 million, of which $8.3 million was allocated to continuing operations and $277,000 expense was allocated to other comprehensive income. Total tax expense for fiscal 2015 was $6.6 million, of which $6.8 million was allocated to continuing operations and $254,000 benefit was allocated to Other Comprehensive Income.

The effective income tax rate differed from the federal statutory tax rate as follows for the periods indicated:

   
January 29,
    
January 31,
    
February 1,
  
   
2017
    
2016
    
2015
  
                   
Income taxes at statutory rate
    
35.0
%
    
35.0
%
    
35.0
%
Increase (decrease) in tax rate resulting from:
                        
      State taxes, net of federal benefit
    
2.2
      
2.1
      
2.0
  
      Domestic Production Deduction
    
(0.4
)
    
(0.6
)
    
-
  
      Captive Insurance
    
(1.3
)
    
-
      
-
  
      Change in valuation allowance
    
1.3
      
-
      
-
  
      Officer’s life insurance
    
(1.2
)
    
(1.1
)
    
(1.2
)
      Other, net
    
(0.1
)
    
(1.6
)
    
(0.6
)
         Effective income tax rate
    
35.5
%
    
33.8
%
    
35.2
%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities for the period indicated were:

   
January 29,
    
January 31,
  
   
2017
    
2016
  
Assets
            
Deferred compensation
  
$
4,817
    
$
4,345
  
Allowance for bad debts
    
955
      
380
  
State income taxes
    
32
      
43
  
Intangible assets
    
609
      
703
  
Inventories
    
662
      
158
  
Employee benefits
    
144
      
-
  
Capital loss carryover
    
525
      
-
  
Other
    
460
      
378
  
Total deferred tax assets
    
8,204
      
6,007
  
Valuation allowance
    
(525
)
    
-
  
     
7,679
      
6,007
  
Liabilities
                
Employee benefits
    
-
      
256
  
Property, plant and equipment
    
131
      
321
  
Total deferred tax liabilities
    
131
      
577
  
Net deferred tax asset without AOCI
    
7,548
      
5,430
  
                 
Deferred tax asset (liability) in AOCI
    
(284
)
    
(80
)
Total net deferred tax asset
  
$
7,264
    
$
5,350
  

At January 29, 2017 and January 31, 2016 our net deferred tax asset was $7.3 million and $5.4 million, respectively. The increase in valuation allowance of $525,000 is due to a capital loss that is not expected to be realized. We expect to fully realize the benefit of the deferred tax assets, with the exception of the capital loss, in future periods when the amounts become deductible.

At January 31, 2016, we had an uncertain tax position of $74,000 related to our investment in a captive insurance arrangement. The reserve increased to $76,000 at January 29, 2017.  Also, at January 31, 2016, we had a reserve of $147,000 for an uncertain tax position related to the use of state loss carryforwards in our tax returns. The balance of this reserve was $125,000 at January 29, 2017. We expect $139,000 of this uncertain tax position to be settled during the next twelve months.

Current accounting standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  The guidance also addresses de-recognition, classification, interest and penalties, accounting in interim periods and disclosures.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the fiscal years ended January 29, 2017 and January 31, 2016 are as follows:

   
January 29,
    
January 31,
  
   
2017
    
2016
  
             
Balance, beginning of year
  
$
279
    
$
482
  
Increase related to prior year tax positions
            
-
  
Decrease related to prior year tax positions
    
(31
)
    
(203
)
Increase related to current year tax positions
            
-
  
Balance, end of year
  
$
248
    
$
279
  

The net unrecognized tax benefits as of January 29, 2017, which, if recognized, would affect our effective tax rate are $201,000. We expect that $157,000 of gross unrecognized tax benefits will decrease within the next year.

We have elected to classify interest and penalties recognized with respect to unrecognized tax benefits as income tax expense.  Interest expense of $23,000 and $12,000 was accrued as of January 29, 2017 and January 31, 2016, respectively.

Tax years ending February 2, 2014, through January 29, 2017 remain subject to examination by federal and state taxing authorities.