(9)Income Taxes

The Company’s income tax provision for the years ended December 31, 2015, 2014 and 2013 consists of the following (in thousands):

	Years Ended December 31,
	2015			2014			2013
Current
Federal	$	3,131		$	2,638		$	4,353
State	580			336			824

	3,711			2,974			5,177
Deferred
Federal	508			1,262			641
State	(71		)	(30		)	99

	437			1,232			740


Total income tax provision	$	4,148		$	4,206		$	5,917

At December 31, 2015, the Company had net operating loss carryforwards for federal income tax purposes of approximately $415,000, which are available to offset future taxable income and expire during the federal tax year ending December 31, 2019. 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 (in thousands):

	December 31,
	2015			2014
Deferred tax assets:
Reserves	$	532		$	428
Inventory capitalization	407			264
Compensation programs	501			404
Retirement liability	27			35
Equity-based compensation	290			276
Net operating loss carryforwards	141			242
Deferred rent	10			36
Intangible assets	264			188

Total deferred tax assets	2,172			1,873
Deferred tax liabilities:
Excess of book over tax basis of fixed assets	(4,186		)	(3,471		)
Goodwill	(869		)	(848		)

Total deferred tax liabilities	(5,055		)	(4,319		)

Net long-term deferred tax liabilities	$	(2,883	)	$	(2,446	)

The amounts recorded as deferred tax assets as of December 31, 2015, and 2014, 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 $2.2 million at December 31, 2015, 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 34.0% to income before income tax expense as follows:

	Years Ended December 31,
	2015		2014		2013
Computed “expected” tax rate	34.0	%	34.0	%	34.0	%
Increase (decrease) in income taxes resulting from:
State taxes, net of federal tax benefit	2.3		1.1		3.6
Meals and entertainment	0.3		0.3		0.1
R&D credits	(0.8	)	(0.7	)	(1.0	)
Domestic production deduction	(2.5	)	(1.4	)	(2.4	)
Non-deductible ISO stock option expense	0.4		0.4		0.2
Unrecognized tax benefits	—		1.3		(0.1	)
Other	1.6		0.8		—

Effective tax rate	35.3	%	35.8	%	34.4	%

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, income tax returns filed in Massachusetts which have been audited through 2007 and income tax returns filed in Florida which have been audited through 2009. The Company’s federal tax return for 2008 has been audited. Federal and state tax returns for the years 2012 through 2014 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 (in thousands):

	December 31,
	2015			2014
Gross UTB balance at beginning of fiscal year	$	230		$	275
Increases for tax positions of prior years	—			—
Reductions for tax positions of prior years	(68		)	(45		)

Gross UTB balance at end of fiscal year	$	162		$	230

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of December 31, 2015 and 2014, are $162,000 and $230,000, respectively.

In addition, the total amount of accrued interest and penalties on uncertain tax positions at December 31, 2015 and 2014 are $153,000 and $195,000, respectively.

At December 31, 2015, all 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 2016, since the Company expects to resolve this examination in 2016.