(10) Income Taxes Components of income tax expense attributable to continuing operations are as follows in thousands): 2006 $ 120,774 30,632 2005 $ 106,087 22,568 Current federal income tax Current state income tax Current foreign income tax Total current tax Deferred federal income tax Deferred state income tax Deferred foreign income tax Total deferred tax Total income tax expense 2007 $ 114,503 34,138 389 149,030 (17,014) (5,091) (5,098) (27,203) $ 121.827 151,406 (13,350) (2,171) 128,655 (22,462) (5,411) (15,521) $ 135.885 (27,873) $ 100,782 Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to income from continuing operations before income taxes as follows (in thousands): 2007 $ 106,599 2006 $ 118,900 2005 S 82,997 1,639 (31) (1,352) (462) Federal tax based on statutory rates Increase (reduction) in income taxes resulting from: Change in valuation allowance Tax exempt interest Share-based compensation Deductible state income taxes Other, net Total federal taxes State income taxes Foreign income taxes Total income tax expense (626) (1,010) 669 (10,167) 2,024 97,489 29,047 (4.709 $ 121.827 (9,962) 331 107,424 28,461 3,310 (6,005) 1,684 83,625 17,157 $ 135.885 $ 100.782 Current income taxes payable as of September 30, 2007 and September 24, 2006 totaled approximately $26.5 million and $27.2 million, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities for continuing operations are as follows (in thousands): 2007 2006 $ 58,457 27,665 $ 43,303 16,889 1,978 18 41,717 Deferred tax assets: Compensation-related costs Insurance-related costs Inventories Lease and other termination accruals Rent differential Tax basis of fixed assets in excess of financial basis Net domestic and international operating loss carryforwards Capital loss carryforwards International charitable contribution carryforwards Gross deferred tax assets Valuation allowance 39,861 42,935 4,587 8,305 2,810 44 186,642 (9,474) 177,168 10,461 2,810 115,198 (13,271) 101.927 Deferred tax liabilities: Financial basis of fixed assets in excess of tax basis Inventories Capitalized costs expensed for tax purposes Other (1,384) (4,008) (5.392) $ 171.776 (21,858) (313) (1,290) (905) (24,366) S77.561 Net deferred tax asset Deferred taxes for continuing operations have been classified on the consolidated balance sheets as follows (in thousands): Current assets Noncurrent assets Net deferred tax asset 2007 $ 66,899 104,877 $ 171.776 2006 $ 48,149 29,412 S 77.561 (1) What deferred tax amounts are shown on the balance sheet and where (Be specific)? (2) Prepare a journal entry to record income tax expense for fiscal 2007. [a level one' analysis is sufficient.] (10) Income Taxes Components of income tax expense attributable to continuing operations are as follows in thousands): 2006 $ 120,774 30,632 2005 $ 106,087 22,568 Current federal income tax Current state income tax Current foreign income tax Total current tax Deferred federal income tax Deferred state income tax Deferred foreign income tax Total deferred tax Total income tax expense 2007 $ 114,503 34,138 389 149,030 (17,014) (5,091) (5,098) (27,203) $ 121.827 151,406 (13,350) (2,171) 128,655 (22,462) (5,411) (15,521) $ 135.885 (27,873) $ 100,782 Actual income tax expense differed from the amount computed by applying statutory corporate income tax rates to income from continuing operations before income taxes as follows (in thousands): 2007 $ 106,599 2006 $ 118,900 2005 S 82,997 1,639 (31) (1,352) (462) Federal tax based on statutory rates Increase (reduction) in income taxes resulting from: Change in valuation allowance Tax exempt interest Share-based compensation Deductible state income taxes Other, net Total federal taxes State income taxes Foreign income taxes Total income tax expense (626) (1,010) 669 (10,167) 2,024 97,489 29,047 (4.709 $ 121.827 (9,962) 331 107,424 28,461 3,310 (6,005) 1,684 83,625 17,157 $ 135.885 $ 100.782 Current income taxes payable as of September 30, 2007 and September 24, 2006 totaled approximately $26.5 million and $27.2 million, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities for continuing operations are as follows (in thousands): 2007 2006 $ 58,457 27,665 $ 43,303 16,889 1,978 18 41,717 Deferred tax assets: Compensation-related costs Insurance-related costs Inventories Lease and other termination accruals Rent differential Tax basis of fixed assets in excess of financial basis Net domestic and international operating loss carryforwards Capital loss carryforwards International charitable contribution carryforwards Gross deferred tax assets Valuation allowance 39,861 42,935 4,587 8,305 2,810 44 186,642 (9,474) 177,168 10,461 2,810 115,198 (13,271) 101.927 Deferred tax liabilities: Financial basis of fixed assets in excess of tax basis Inventories Capitalized costs expensed for tax purposes Other (1,384) (4,008) (5.392) $ 171.776 (21,858) (313) (1,290) (905) (24,366) S77.561 Net deferred tax asset Deferred taxes for continuing operations have been classified on the consolidated balance sheets as follows (in thousands): Current assets Noncurrent assets Net deferred tax asset 2007 $ 66,899 104,877 $ 171.776 2006 $ 48,149 29,412 S 77.561 (1) What deferred tax amounts are shown on the balance sheet and where (Be specific)? (2) Prepare a journal entry to record income tax expense for fiscal 2007. [a level one' analysis is sufficient.]