12.

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)	201 7			201 6			201 5
Current:
Federal	$	7,695		$	2,563		$	(149	)
State and local		666			929			(752	)
		8,361			3,492			(901	)
Deferred		(10,974	)		(1,994	)		(5,916	)
Income tax provision (benefit)	$	(2,613	)	$	1,498		$	(6,817	)

he components of the Company’s deferred income taxes at

December 31

are as follows:

(in thousands )	201 7			201 6
Deferred tax assets :
Inventory (excluding LIFO reserve )	$	1,690		$	2,531
Net operating loss and tax credit carryforward s		3,520			3,224
Allowance for doubtful account s		419			533
Accrued expense s		5,684			7,228
Othe r		143			169
Deferred tax assets before valuation allowanc e		11,456			13,685
Valuation allowanc e		(2,379	)		(2,017	)
Total deferred tax asset s		9,077			11,668

Deferred tax liabilities :
LIFO reserv e		(3,958	)		(5,874	)
Property and equipmen t		(11,363	)		(19,846	)
Intangible s		(5,901	)		(9,067	)
Total deferred tax liabilitie s		(21,222	)		(34,787	)
Deferred tax liabilities, ne t	$	(12,145	)	$	(23,119	)

The following table summarizes the activity related to the Company

’s gross unrecognized tax benefits:

(in thousands )	201 7			201 6			201 5
Balance as of January 1	$	38		$	38		$	58
Decreases related to prior year tax positions		-			-			(20	)
Increases related to current year tax positions		15			13			13
Decreases related to lapsing of statute of limitations		(13	)		(13	)		(13	)
Balance as of December 31	$	40		$	38		$	38

It is expected that the amount of unrecognized tax benefits will

not

materially change in the next

twelve

months. The tax years

through

2016

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.

The following table reconciles the U.S. federal statutory rate to the Company

’s effective tax rate:

	201 7			201 6			201 5
U.S. federal statutory rate in effect		35.0%			35.0%			35.0%
State and local taxes, net of federal benefit		3.6%			11.8%			1.4%
Sec. 199 manufacturing deduction		(3.8%	)		(33.6%	)		0.0%
Meals and entertainment		1.8%			64.3%			(0.6%	)
Tax credits		(1.3%	)		(48.7%	)		0.4%
Change in valuation allowance		0.6%			205.4%			0.0%
Change in U.S. federal statutory rate		(37.7%	)		0.0%			0.0%
Change in tax affect of SERP		(11.4%	)		0.0%			0.0%
Goodwill impairment		0.0%			0.0%			(17.1%	)
All other, net		(2.8%	)		122.4%			1.2%
Effective income tax rate		(16.0%	)		356.6%			20.3%

2017,

the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section

162

(m) limitations in prior years. Due to the mandatory waiting period of

six

months prior to any SERP payment distribution, in

2017

the Company determined that the Section

162

(m) non-deductibility limitations did

not

apply. The adjustment, which had accumulated since the inception of the SERP in

2005,

resulted in an increase to after-tax income of

$1.9

million in

2017.

The Company determined that this adjustment was

not

material to its current or prior period consolidated financial statements.

December

22,

2017,

the President of the United States signed into law the Tax Act. The Tax Act, among other things, lowered the U.S. corporate income tax rate from

35%

21%

effective

January

2018.

Consequently, the Company decreased its net deferred tax liability as of

December

31,

2017

$6.2

million resulting in an income tax benefit to reflect the estimated impact of the Tax Act. Based on the Company’s predominantly U.S. based operational footprint, additional international and minimum tax provisions under the Tax Act, including the

one

-time transition tax for the transition from the worldwide system to the territorial system, are

not

applicable, or would

not

be material to the Company.

The Company believes the calculation of the impact as a result of the

reduced U.S. corporate income tax rate is complete except for changes in estimates that can result from finalizing the filing of its

2017

U.S. income tax return, which are

not

anticipated to be material, and changes that

may

be a direct impact of other provisional amounts recorded due to the enactment of the Tax Act.

While the Company has substantially completed

its analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, certain items related to the Tax Act

may

differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that

may

be issued by the U.S. government, and actions related to accounting policy decisions the Company

may

make as a result of the Tax Act. The Company will complete its analysis of these items over a

one

-year measurement period ending

December 22, 2018,

and any adjustment provided by the SEC under SAB

118

during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined.

The Company's

effective tax rate was disproportionately high in

2016

from comparative periods due to low income before taxes relative to items that impact the effective tax rate. During

2016,

the Company recorded a valuation allowance of

$0.9

million to reduce certain state deferred tax assets to the amount that is more likely than

not

to be realized.

Income t

axes paid in

2017,

2016

and

2015

totaled

$9.4

million,

$1.0

million and

$0.6

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

years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than

not

to be realized.