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INCOME TAXES | 12 Months Ended
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Dec. 31, 2013
INCOME TAXES |
INCOME TAXES | NOTE 6: INCOME TAXES The following table lists the components of the provision for income taxes:
Years ended December 31, |  | 2013 |  |  | 2012 |  |  | 2011 |
(in thousands) |  |  |  |  |  |  |  |  |
Current provision (benefit): |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,325 |  |  | $ | 3,146 |  |  | $ | 1,757 |
State |  |  | 99 |  |  |  | 94 |  |  |  | (14 | )
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 57 |  |  |  | (493 | ) |  |  | (90 | )
State |  |  | 21 |  |  |  | (5 | ) |  |  | 14 |
Total income tax provision |  | $ | 2,502 |  |  | $ | 2,742 |  |  | $ | 1,667 |
A reconciliation between the federal statutory rate and Marine Products’ effective tax rate is as follows:
Years ended December 31, |  | 2013 |  |  | 2012 |  |  | 2011 |
Federal statutory rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State income taxes, net of federal benefit |  |  | 0.7 |  |  |  | 0.5 |  |  |  | 0.8 |
Research and experimentation credit |  |  | (4.9 | ) |  |  | — |  |  |  | (0.2 | )
Tax-exempt interest |  |  | (1.4 | ) |  |  | (2.3 | ) |  |  | (3.0 | )
Tax-exempt (gain) loss on SERP assets |  |  | (1.2 | ) |  |  | (0.6 | ) |  |  | 0.2 |
Tax-exempt gain – benefit plan financing |  |  | — |  |  |  | — |  |  |  | (8.4 | )
Manufacturing deduction |  |  | (2.7 | ) |  |  | (3.0 | ) |  |  | (2.0 | )
Change in valuation allowance |  |  | 0.2 |  |  |  | — |  |  |  | — |
Other |  |  | 0.2 |  |  |  | (0.4 | ) |  |  | (1.5 | )
Effective tax rate |  |  | 24.9 | % |  |  | 28.2 | % |  |  | 19.9 | %
Significant components of the Company’s deferred tax assets and liabilities are as follows:
December 31, |  | 2013 |  |  | 2012 |
(in thousands) |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |
Warranty costs |  | $ | 1,211 |  |  | $ | 895 |
Sales incentives and discounts |  |  | 542 |  |  |  | 942 |
Stock-based compensation |  |  | 938 |  |  |  | 838 |
Pension |  |  | 1,919 |  |  |  | 2,212 |
All others |  |  | 268 |  |  |  | 331 |
State credits and NOL’s |  |  | 4,634 |  |  |  | 4,450 |
Valuation allowance |  |  | (4,359 | ) |  |  | (4,155 | )
Total deferred tax assets |  |  | 5,153 |  |  |  | 5,513 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization expense |  |  | (880 | ) |  |  | (699 | )
Net deferred tax assets |  | $ | 4,273 |  |  | $ | 4,814 |
Total net income tax payments were $2,600,000 in 2013, $3,655,000 in 2012 and $880,000 in 2011. As of December 31, 2013 the Company had net operating loss carry forwards related to state income taxes and credits of approximately $18.5 million that will expire between 2014 and 2033. As of December 31, 2013 the Company has a valuation allowance of approximately $4.4 million, representing the tax affected amount of state tax credits and loss carry forwards that the Company does not expect to utilize, against the corresponding deferred tax asset. The Company’s policy is to record interest and penalties related to income tax matters as income tax expense. Accrued interest and penalties were immaterial as of December 31, 2013 and 2012. In accordance with the accounting guidance relating to the accounting for uncertainty in income tax reporting, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions, the Company did not recognize a material adjustment in the liability for unrecognized income tax benefits. As of December 31, 2013 and 2012, our liability for unrecognized tax benefits was $11,000 and $14,000, respectively, all of which would affect our effective rate if recognized. It is reasonably possible that the amount of the unrecognized benefits with respect to our unrecognized tax positions will increase or decrease in the next 12 months. These changes may be the result of, among other things, state tax settlements under voluntary disclosure agreements. However, quantification of an estimated range cannot be made at this time. The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In many cases our uncertain tax positions are related to tax years that remain open and subject to examination by the relevant taxing authorities. The Company’s 2010 through 2013 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year. The American Taxpayer Relief Act of 2012 (“Act”) was signed into law on January 2, 2013 and includes an extension for one year of the 50% bonus depreciation allowance. The provision specifically applies to qualifying property placed in service before January 1, 2014. The accelerationof deductions on 2013 qualifying capital expenditures resulting from the bonus depreciation provision had no impact on our 2013 effective tax rate. Additionally, the Act retroactively reinstated the provisions of the research and experimentation credits (“R&E credits”) for 2012 and 2013. As a result of the retroactive extension, our effective rate for 2013 included a tax benefit from the R&E credits attributable to 2012 and 2013. On September 23, 2013, the U.S. Department of the Treasury issued final regulations under Internal Revenue Code Sections 162(a) and 263(a) that provide guidance on the deduction and capitalization of expenditures related to tangible property. These regulations will result in our adoption of certain mandatory and elective accounting methods with respect to property and equipment, inventory and supplies. We have evaluated these accounting method changes, which are effective January 1, 2014. These regulations do not have a material impact on our results of operations or financial position.

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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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