Income Taxes

Components of the provision for income taxes are as follows:



	2016			2015		2014
Current:
Federal - US	$	3,408,000		$	4,466,000	$	1,875,000
Federal - Foreign	—			405,000		453,000
State and local	2,000			18,000		42,000
	3,410,000			4,889,000		2,370,000
Deferred:
Federal	490,000			1,143,000		2,423,000
Federal- Foreign	(86,000		)	27,000		(29,000		)
State and local	22,000			59,000		127,000
	426,000			1,229,000		2,521,000
Provision for income taxes	$	3,836,000		$	6,118,000	$	4,891,000

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



	2016			2015			2014
Provision at federal statutory rate - US	$	3,823,000		$	6,177,000		$	4,938,000
Effect of foreign taxes	34,000			(84,000		)	(115,000		)
Disqualified stock options	—			(5,000		)	(84,000		)
State and local tax expense, net of federal benefit	24,000			76,000			170,000
Other	(45,000		)	(46,000		)	(18,000		)
Provision for income taxes	$	3,836,000		$	6,118,000		$	4,891,000

In October 2016, the Internal Revenue Service entered into a unilateral agreement with the Large Taxpayer Division of Mexico's Servicio de Administracion Tributaria (SAT) to provide for a Fast Track methodology to resolve all pending Advanced Pricing Agreements (APA) for the Maquiladora industry. The Company's Mexican subsidiary filed an APA and qualifies for and has adopted this methodology. The cumulative change for 2014 through 2016 results in a transfer pricing adjustment in 2016 increasing the parent company's income and a resulting reduction in income for the Mexican subsidiary. This resulted in creating a $321,000 operating loss in 2016 for the Mexican subsidiary. This net operating loss carryforward ("NOL") is available to offset future taxable income in Mexico. The Company anticipates utilizing this NOL in 2017, therefore no valuation allowance has been recorded.

Taxes payable for vested restricted stock value below the fair market value at grant date amounted to $16,000 for the year ended December 31, 2016. Certain tax benefits related to incentive stock options and vesting of restricted stock totaled $211,000 and $395,000 for the years ended December 31, 2015 and 2014, respectively.

The Company performs an analysis to evaluate the balance of deferred tax assets that will be realized. The analysis is based on the premise that the deferred tax benefits will be realized through the generation of future taxable income. Based on the analysis, the Company has not realized a valuation allowance on the deferred tax assets as of December 31, 2016 and 2015.

Deferred tax assets consist of the following at December 31:



	2016			2015
Current asset (liability):
Accrued liabilities	$	938,000		$	820,000
Accounts receivable	110,000			202,000
Inventory	588,000			698,000
Other, net	(255,000		)	(122,000		)
Total current asset	1,381,000			1,598,000

Non-current asset (liability):
Property, plant, and equipment	(5,274,000		)	(4,844,000		)
Post retirement benefits	3,212,000			3,350,000
Other, net	(311,000		)	(758,000		)
Total non-current asset (liability)	(2,373,000		)	(2,252,000		)
Total deferred tax asset (liability) - net	$	(992,000	)	$	(654,000	)

At December 31, 2016, a provision has not been made for U.S. taxes on accumulated undistributed earnings of approximately $6,965,000 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, 2016 and 2015 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 and local jurisdictions. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for the years before 2013, and no longer subject to Mexican income tax examinations by Mexican authorities for the years before 2011.