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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes |
10. | Income Taxes
The provision for income taxes from continuing operations is as follows (in thousands):
|  | Year ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (8,022 | ) |  | $ | 6,386 |  |  | $ | 5,378 |
State |  |  | (741 | ) |  |  | 1,225 |  |  |  | 685 |
|  |  | (8,763 | ) |  |  | 7,611 |  |  |  | 6,063 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (10,237 | ) |  |  | (519 | ) |  |  | 341 |
State |  |  | 747 |  |  |  | (82 | ) |  |  | (76 | )
|  |  | (9,490 | ) |  |  | (601 | ) |  |  | 265 |
Total (benefit) provision |  | $ | (18,253 | ) |  | $ | 7,010 |  |  | $ | 6,328 |
Deferred income tax assets and liabilities are comprised of the following components (in thousands):
|  | December 31, |
|  | 2014 |  |  | 2013 |
Gross deferred income tax assets: |  |  |  |  |  |  |  |
Workers’ compensation claims liabilities |  | $ | 12,168 |  |  | $ | 6,985 |
Safety incentives payable |  |  | 3,782 |  |  |  | 3,529 |
Allowance for doubtful accounts |  |  | 118 |  |  |  | 94 |
Tax effect of unrealized losses, net |  |  | 856 |  |  |  | 959 |
Alternative minimum tax credit carryforward |  |  | 1,840 |  |  |  | 0 |
State credit carryforward |  |  | 969 |  |  |  | 805 |
State loss carryforward |  |  | 568 |  |  |  | 0 |
Workers’ opportunity tax credit and EZ credit carryforward |  |  | 3,162 |  |  |  | 0 |
Other |  |  | 605 |  |  |  | 504 |
|  |  | 24,068 |  |  |  | 12,876 |
Less valuation allowance |  |  | 1,078 |  |  |  | 1,763 |
|  |  | 22,990 |  |  |  | 11,113 |
Gross deferred income tax liabilities: |  |  |  |  |  |  |  |
Tax depreciation in excess of book depreciation |  |  | (3,770 | ) |  |  | (2,793 | )
Tax amortization of goodwill |  |  | (11,588 | ) |  |  | (10,178 | )
|  |  | (15,358 | ) |  |  | (12,971 | )
Net deferred income tax assets (liabilities) |  | $ | 7,632 |  |  | $ | (1,858 | )
The effective tax rate for continuing operations differed from the U.S. statutory federal tax rate due to the following:
|  | Year ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Statutory federal tax rate |  |  | (35.0 | )% |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal benefit |  |  | .2 |  |  |  | 3.4 |  |  |  | .4 |
Valuation allowance on capital loss carryforward and state tax credit carryforward |  |  | (.2 | ) |  |  | (.4 | ) |  |  | 2.3 |
Adjustment for final positions on filed returns |  |  | (.7 | ) |  |  | (1.5 | ) |  |  | (.3 | )
Nondeductible expenses and other, net |  |  | 2.2 |  |  |  | .8 |  |  |  | 4.4 |
Federal tax-exempt interest income |  |  | (.2 | ) |  |  | (.2 | ) |  |  | (.4 | )
Federal and state tax credits |  |  | (6.6 | ) |  |  | (8.9 | ) |  |  | (8.9 | )
|  |  | (40.3 | )% |  |  | 28.2 | % |  |  | 32.5 | %
The Company has established a valuation allowance for certain deferred tax assets due to uncertainties regarding the Company’s ability to generate future taxable investment gains in order to utilize certain investment impairment losses and investment loss carry forwards for tax purposes. The realization of a significant portion of net deferred tax assets is based in part on our estimates of the timing of reversals of certain temporary differences and on the generation of taxable income before such reversals. At December 31 2014, we maintained a valuation allowance for approximately $1.1 million of federal and state tax benefits that are not expected to be utilized. Under ASC 740, “Income Taxes,” management evaluates the realizability of the deferred tax assets on a quarterly basis under a “more-likely than not” standard. As part of this evaluation, management reviews all evidence both positive and negative to determine if a valuation allowance is needed. One component of this analysis is to determine whether the Company was in a cumulative loss position for the most recent 12 quarters. Despite the increase to the workers’ compensation reserve in the third quarter of 2014, the Company was in a cumulative income position for the 12 quarters ended December 31, 2014. Management’s review of positive evidence included the existence of federal and California taxable income in eligible carryback years, reversal of temporary items, and projection of future taxable income. The projection of future taxable income was a significant factor in management’s determination that no additional valuation allowance was required at December 31, 2014. Management’s projections of taxable income are based on the existence of signed annual contracts with the Company’s PEO customer base, objective evidence that the Company’s customers are retained at a high rate over long periods, and objective evidence that recent price increase initiatives are being accepted by the Company’s customer base. Management has continued to improve the Company’s procedures in many areas of its self-insured workers’ compensation program over the past two years as described in Note 6. The results of these efforts have improved management’s ability to project workers’ compensation expense. Management will monitor the need for an additional valuation allowance at each quarter in the future and, if the negative evidence outweighs the positive evidence, an allowance will be recorded. The Company is subject to Income taxes in U.S. federal and multiple state and local tax jurisdictions. In the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2010. As of December 31, 2014 and 2013, the Company had no unrecognized tax benefits. A portion of the consolidated income the Company generates is not subject to state income tax. Depending on the percentage of this income to total consolidated income, the Company’s state effective rate can fluctuate from expectations. As a result of the mix of income subject to state income tax, total state tax expense decreased by approximately $4,000, $284,000 and $498,000 in 2014, 2013 and 2012, respectively. At December 31, 2014, the Company had capital loss carry forward of approximately $2.1 million. The carry forward will expire unless utilized in tax years on or before December 31, 2015. At December 31, 2014, the Company had federal general business tax credit carry forwards of approximately $3.2 million. The carry forwards will expire unless utilized in tax years on or before December 31, 2024. The Company also had an alternative minimum tax credit carry forward of approximately $1.8 million. The credit carry forward has an indefinite life and will not expire until utilized. At December 31, 2014, the Company had state tax credit carry forwards of approximately $1.5 million. The carryforwards expire unless utilized in tax years on or before December 31, 2024. At December 31, 2014, the Company had a California net operating loss carry forward of approximately $6.7 million. The carry forward will expire unless utilized in tax years on or before December 31, 2034. In addition, the Company had a total of approximately $3.9 million in net operating loss carry forwards from other states that will expire unless utilized in tax years between December 31, 2021 and December 31, 2034.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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