Entity information:
1
4
. Income Taxes
 
The following are the components of the provision for income
taxes as of
September 30, 2017,
2016
and
2015,
respectively, dollars in thousands:
 
   
Year ended September 30,
  
   
2017
    
2016
    
2015
  
Current federal income tax expense (benefit)
   $
2,837
      
(853
)
    
7,769
  
Current state income tax expense (benefit)
    
336
      
(254
)
    
1,033
  
Total current income tax expense (benefit)
    
3,173
      
(1,107
)
    
8,802
  
                         
Deferred federal income tax expense
    
206
      
6,103
      
514
  
Deferred state income tax expense
    
35
      
868
      
116
  
Total deferred income tax expens
e
    
241
      
6,971
      
630
  
                         
Total provision for income taxes
   $
3,414
      
5,864
      
9,432
  
 
The differences between the
United States federal statutory income tax rate and the Company’s effective tax rate are as follows:
 
   
Year ended
September
30,
  
   
2017
    
2016
    
201
5
  
Statutory tax rate
    
34.0
%
    
34.0
      
35.0
  
State income taxes, net of federal income tax expense
    
2.7
      
2.9
      
2.9
  
Enhanced
food deduction
    
(2.7
)
    
(1.6
)
    
—
  
Other, net
    
(0.9
)
    
(1.4
)
    
(1.1
)
Effective tax rate
    
33.1
%
    
33.9
      
36.8
  
 
 
The Company’s effective tax rate decreased from
33.9%
in the year ended
September 30, 2016
to
33.1%
in the year ended
September 30, 2017
primarily due to an increase in federal tax credits for the year ended
September 30, 2017.
 
The Company has early adopted the requirements of ASU
2015
-
17,
“Income Taxes,” Topic
740,
“Balance Sheet Classification of Deferred Taxes,” and applied the amended provisions prospectively.  Deferred taxes have been classified on the consolidated balance sheets as follows, dollars in thousands:
 
   
As of September
30,
  
   
2017
    
2016
  
Current assets
   $
—
      
—
  
Long-term liabilities
    
(12,419
)
    
(12,178
)
Net deferred tax
liabilities
  $
(12,419
)
    
(12,178
)
 
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows
, dollars in thousands:
 
   
As of September
30,
  
   
2017
    
2016
  
Deferred tax assets
                
Capital and financing lease obligations
   $
12,670
      
12,091
  
Goodwill
    
1,853
      
2,222
  
Leasehold incentives
    
3,484
      
3,187
  
Deferred rent
    
3,980
      
3,350
  
Trademarks
    
1,021
      
1,021
  
Accrued employee benefits
    
910
      
734
  
Oth
er
   
907
      
597
  
Gross deferred tax assets
    
24,825
      
23,202
  
                 
Deferred tax liabilities
                
Property and equipment
    
(33,127
)
    
(32,103
)
Leasehold improvements
    
(3,774
)
    
(3,195
)
Other
    
(343
)
    
(82
)
Gross deferred tax liabilities
    
(37,244
)
    
(35,380
)
Net deferred tax liabilities
   $
(12,419
)
    
(12,178
)
 
The Company believes that it is more likely than
not
that it will fully realize all deferred tax assets in the form of future deductions based on the nature of the deductible temporary differences and expected future taxable income.
 
The Company utilized less than
$0.1
million and
zero
in tax effected state income tax carryforwards in the years ended
September 30, 2017
and
2016,
respectively.
 
The Company did
not
have any uncertain tax positions as of
September 30, 2017.
 
The Company files income tax returns with federal, state and local tax authorities. With limited exceptions, the Company is
no
longer subject to federal income tax examinations for fiscal years
2014
and prior and is
no
longer subject to state and local income tax examinations for fiscal years
2012
and prior.