Income Taxes

Components of the provision for income taxes are as follows:



	2012		2011
Current:
Federal - US	$	3,633,000	$	4,793,000
Federal - Foreign	227,000		242,000
State and local	96,000		117,000
	3,956,000		5,152,000
Deferred:
Federal	10,000		566,000
State and local	—		4,000
	10,000		570,000
Provision for income taxes	$	3,966,000	$	5,722,000

A reconciliation of the income tax provision based on the federal statutory income tax rate of 34% to the Company's income tax provision for the years ended December 31 is as follows:



	2012			2011
Provision at federal statutory rate - US	$	4,133,000		$	5,525,000
Effect of Mexican income tax penalties, interest and surcharges	—			89,000
Effect of foreign taxes	(169,000		)	84,000
Other	2,000			24,000
Provision for income taxes	$	3,966,000		$	5,722,000

The Company's 2009 Mexican income tax return was reviewed by Mexican tax authorities in 2011 and was closed in early 2012. As a result of the review, the Company incurred expense of approximately $89,000 in income tax penalties, interest and surcharges during 2011, all of which was included in income tax expense.

Certain tax benefits related to incentive stock options recorded directly to additional paid in capital totaled $163,000 and $322,000 for the years ended December 31, 2012 and 2011, respectively.

The Company’s consolidated balance sheets at December 31, 2012 and December 31, 2011 include a net deferred tax asset of $3,164,000 and $2,888,000, respectively. The Company performs analyses to evaluate the balance of deferred tax assets that will be realized. Such analyses are based on the premise that the Company is, and will continue to be, a going concern and that it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income.

Deferred tax assets consist of the following at December 31:



	2012			2011
Current asset (liability):
Accrued liabilities	$	661,000		$	687,000
Accounts receivable	446,000			545,000
Inventory	678,000			704,000
Other, net	(87,000		)	(93,000		)
Total current asset	1,698,000			1,843,000

Non-current asset (liability):
Property, plant, and equipment	(2,080,000		)	(2,197,000		)
Post retirement benefits	3,662,000			3,459,000
Interest rate swap	72,000			112,000
Other, net	(188,000		)	(329,000		)
Total non-current asset	1,466,000			1,045,000

Total deferred tax asset - net	$	3,164,000		$	2,888,000

At December 31, 2012, a provision has not been made for U.S. taxes on accumulated undistributed earnings of approximately $4,174,000 of the Company's Mexican subsidiary that would become payable upon repatriation to the United States. It is the intention of the Company to reinvest all such earnings in operations and facilities outside of the United States.

At December 31, 2012 and 2011 the Company had no liability for unrecognized tax benefits under guidance relating to tax uncertainties. The Company does not anticipate that the unrecognized tax benefits will significantly change within the next twelve months.

The Company files income tax returns in the U.S. federal jurisdiction, Mexico and various state jurisdictions. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for the years before 2009, and no longer subject to Mexican income tax examinations by Mexican authorities for the years before 2007.