Note 7 – Income taxes:

The provision for income taxes and the difference between such provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate of 35% are presented below. All of our pre-tax income relates to operations in the United States.

	Years ended December 31,
	2015			2016			2017
	(In thousands)
Provision for income taxes:
Currently payable	$	4,778		$	5,621		$	5,736
Deferred income tax expense (benefit)		125			(114	)		(1,775	)
Total	$	4,903		$	5,507		$	3,961
Expected tax expense, at the U.S. federal statutory income tax rate of 35%	$	4,908		$	5,588		$	6,007
Changes in federal tax rate, net		-			-			(1,861	)
State income taxes		387			388			235
Domestic production activities deduction		(415	)		(495	)		(505	)
Other, net		23			26			85
Total	$	4,903		$	5,507		$	3,961

On December 22, 2017, H.R.1, formally known as the “Tax Cuts and Jobs Act” (“2017 Tax Act”) was enacted into law. This new tax legislation, among other changes, reduces the federal corporate income tax rate from 35% to 21% effective January 1, 2018. Following the enactment of the 2017 Tax Act, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) 118 to provide guidance on the accounting and reporting impacts of the 2017 Tax Act. SAB 118 states that companies should account for changes related to the 2017 Tax Act in the period of enactment if all information is available and the accounting can be completed. In situations where companies do not have enough information to complete the accounting in the period of enactment, a company must either 1) record an estimated provisional amount if the impact of the change can be reasonably estimated; or 2) continue to apply the accounting guidance that was in effect immediately prior to the 2017 Tax Act if the impact of the change cannot be reasonably estimated. If estimated provisional amounts are recorded, SAB 118 provides a measurement period of no longer than one year during which companies should adjust those amounts as additional information becomes available.

Under GAAP, we are required to revalue our net deferred tax liability associated with our net taxable temporary differences in the period in which the new tax legislation is enacted based on deferred tax balances as of the enactment date, to reflect the effect of the reduction in the corporate income tax rate. Our temporary differences as of December 31, 2017 are not materially different from our temporary differences as of the enactment date. Accordingly, revaluation of our temporary differences is based on our net deferred tax liability as of December 31, 2017. Such revaluation resulted in a non-cash deferred income tax benefit of approximately $1.9 million, recognized in continuing operations, reducing our net deferred tax liability. The new tax legislation also eliminated the domestic production activities deduction beginning in 2018 and allows for the expensing of certain capital expenditures for assets placed in service between September 28, 2017 and December 31, 2022. The amounts recorded as of December 31, 2017 as a result of the 2017 Tax Act represent estimates based on information currently available and, in accordance with the guidance in SAB 118, these amounts are provisional and subject to adjustment as we obtain additional information and complete our analysis in 2018. If the underlying guidance or tax laws change and such change impacts the income tax effects of the new legislation recognized at December 31, 2017, or we determine we have additional tax liabilities under other provisions of the 2017 Tax Act, we will recognize an adjustment in the reporting period within the measurement period, which period ends December 22, 2018, in which such adjustment is determined.

The components of the net deferred tax liability are summarized below.

	December 31,
	2016			2017
	(In thousands)
Tax effect of temporary differences related to:
Inventories	$	507		$	347
Property and equipment		(4,468	)		(2,796	)
Accrued liabilities and other deductible differences		114			23
Accrued employee benefits		1,592			1,009
Goodwill		(2,625	)		(1,691	)
Other taxable differences		(7	)		(4	)
Total deferred tax liability	$	(4,887	)	$	(3,112	)

We and Contran file income tax returns in U.S. federal and various state and local jurisdictions. Our income tax returns prior to 2014 are generally considered closed to examination by applicable tax authorities.