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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes |
Income Taxes | (10) Income Taxes The Company’s income tax provision (benefit) for the years ended December 31, 2012, 2011, and 2010, consists of the following:
|  | Years Ended December 31 |
|  | 2012 |  | 2011 |  | 2010 |
Current: |  |  |  |  |  |  |
Federal |  | $ | 4,301,000 |  | $ | 3,752,000 |  | $ | 4,259,000 |
State |  | 768,000 |  | 702,000 |  | 454,000 |
|  | 5,069,000 |  | 4,454,000 |  | 4,713,000 |
Deferred: |  |  |  |  |  |  |
Federal |  | 699,000 |  | 396,000 |  | 191,000 |
State |  | (89,000 | ) | 56,000 |  | 115,000 |
|  | 610,000 |  | 452,000 |  | 306,000 |
Total income tax provision |  | $ | 5,679,000 |  | $ | 4,906,000 |  | $ | 5,019,000 |
At December 31, 2012, the Company had net operating loss carryforwards for federal income tax purposes of approximately $1.3 million, which are available to offset future taxable income and expire during the federal tax years ending December 31, 2019, through 2024. The future benefit of the federal net operating loss carryforwards will be limited to approximately $300,000 per year in accordance with Section 382 of the Internal Revenue Code. The approximate tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:
|  | December 31 |
|  | 2012 |  | 2011 |
Current deferred tax assets: |  |  |  |  |
Reserves |  | $ | 383,000 |  | $ | 377,000 |
Inventory capitalization |  | 205,000 |  | 230,000 |
Compensation programs |  | 245,000 |  | 262,000 |
Retirement liability |  | 55,000 |  | 72,000 |
Equity-based compensation |  | 228,000 |  | 228,000 |
Total current deferred tax assets |  | $ | 1,116,000 |  | $ | 1,169,000 |
Long-term deferred tax assets / (liabilities): |  |  |  |  |
Excess of book over tax basis of fixed assets |  | $ | (1,688,000 | ) | $ | (1,421,000 | )
Goodwill |  | (751,000 | ) | (691,000 | )
Intangible assets |  | (69,000 | ) | (146,000 | )
Total long-term deferred tax liabilities |  | (2,508,000 | ) | (2,258,000 | )
Net operating loss carryforwards |  | 443,000 |  | 544,000 |
Deferred rent |  | 67,000 |  | 64,000 |
Compensation programs |  | 408,000 |  | 358,000 |
Total long-term deferred tax assets |  | 918,000 |  | 966,000 |
Net long-term deferred tax liabilities |  | $ | (1,590,000 | ) | $ | (1,292,000 | )
The amounts recorded as deferred tax assets as of December 31, 2012, and 2011, represent the amount of tax benefits of existing deductible temporary differences or carryforwards that are more likely than not to be realized through the generation of sufficient future taxable income within the carryforward period. The Company has total deferred tax assets of $2,034,000 at December 31, 2012, that it believes are more likely than not to be realized in the carryforward period. Management reviews the recoverability of deferred tax assets during each reporting period. The actual tax provision for the years presented differs from the “expected” tax provision for those years, computed by applying the U.S. federal corporate rate of 34% to income before income tax expense as follows:
|  | Years Ended December 31 |
|  | 2012 |  | 2011 |  | 2010 |
Computed “expected” tax rate |  | 34.0 | % | 34.0 | % | 34.0 | %
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |
State taxes, net of federal tax benefit |  | 2.7 |  | 3.4 |  | 2.0 |
Meals and entertainment |  | 0.1 |  | 0.1 |  | 0.1 |
R&D credits |  | (0.1 | ) | (0.4 | ) | (0.3 | )
Domestic production deduction |  | (2.5 | ) | (2.8 | ) | (1.8 | )
Non-deductible ISO stock option expense |  | 0.1 |  | 0.1 |  | 0.1 |
Unrecognized tax benefits |  | (0.2 | ) | (2.4 | ) | 1.0 |
Income of non-controlling interests |  | — |  | (1.0 | ) | (0.4 | )
Other |  | 0.2 |  | 0.3 |  | 0.1 |
Effective tax rate |  | 34.3 | % | 31.3 | % | 34.8 | %
The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company has not been audited by any state for income taxes with the exception of returns filed in Michigan which have been audited through 2004, and income tax returns filed in Massachusetts for 2005 and 2006, and Florida for 2007, 2008, and 2009 (which are currently being audited). The Company’s federal tax return for 2008 has been audited. Federal and state tax returns for the years 2009 through 2011 remain open to examination by the IRS and various state jurisdictions. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) resulting from uncertain tax positions is as follows:
|  | Federal and State Tax |
|  | 2012 |  | 2011 |
Gross UTB balance at beginning of fiscal year |  | $ | 320,000 |  | $ | 685,000 |
Increases for tax positions of prior years |  | — |  | 40,000 |
Reductions for tax positions of prior years |  | (30,000 | ) | (405,000 | )
Gross UTB balance at December 31 |  | $ | 290,000 |  | $ | 320,000 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2012, and 2011, are $290,000 and $320,000, respectively, for each year. At December 31, 2012, and 2011, there was no accrued interest or penalties on uncertain tax positions. At December 31, 2012, approximately $265,000 of the unrecognized tax benefits relate to tax returns of a specific state jurisdiction that are currently under examination. Accordingly, the Company expects a reduction of this amount during 2013, since the Company expects to resolve this examination in 2013..

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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