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Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2014

13.

Income Taxes:

The components of the Company’s provision (benefit) for income taxes from continuing operations were as follows:

	As of December 31,
(in thousands)	2014			2013			2012
Current:
Federal	$	4,859		$	6,207		$	8,058
State and local		657			1,265			1,021
		5,516			7,472			9,079
Deferred		(2,566	)		(2,195	)		(1,217	)
Income tax provision	$	2,950		$	5,277		$	7,862

The components of the Company’s short and long-term deferred income taxes at December 31 are as follows:

(in thousands)	2014			2013
Deferred tax assets:
Inventory (excluding LIFO reserve)	$	2,881		$	2,588
Net operating loss and tax credit carryforwards		2,971			3,044
Allowance for doubtful accounts		519			585
Accrued expenses		7,642			7,459
Other		83			83
		14,096			13,759
Valuation reserve		(1,381	)		(1,298	)
Total deferred tax assets		12,715			12,461

Deferred tax liabilities:
LIFO reserve		(6,049	)		(6,213	)
Property and equipment		(22,684	)		(24,339	)
Intangibles		(14,930	)		(15,259	)
Other		24			(24	)
Total deferred tax liabilities		(43,639	)		(45,835	)
Deferred tax liabilities, net	$	(30,924	)	$	(33,374	)

The deferred tax liability decreased by $125 thousand related to the interest rate swap.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

(in thousands)	2014			2013			2012

Balance as of January 1	$	75		$	112		$	75
Decreases related to prior year tax positions		(17	)		(37	)		-
Increases related to current year tax positions		13			25			61
Decreases related to lapsing of statute of limitations		(13	)		(25	)		(24	)
Balance as of December 31	$	58		$	75		$	112

It is expected that the amount of unrecognized tax benefits will not materially change in the next twelve months. The tax years 2011 through 2013 remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in income tax expense. As of December 31, 2014 and December 31, 2013, the Company had approximately $4 thousand of gross accrued interest related to uncertain tax positions, respectively.

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

	2014			2013			2012
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal benefit		(1.6	%)		3.0	%		6.9	%
Goodwill impairment		(52.0	%)		-			22.7	%
Valuation allowance		-			-			8.5	%
Change in unrecognized tax benefits		(0.1	%)		(0.2	%)		-
All other, net		0.4	%		3.0	%		4.4	%
Effective income tax rate		(18.3	%)		40.8	%		77.5	%

Income taxes paid in 2014, 2013 and 2012 totaled $4.7 million, $7.6 million and $6.9 million, respectively. Some subsidiaries of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss carryforwards expiring over the next seven to 20 years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than not to be realized.

- 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.

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