9. INCOME TAXES

The components of the income tax expense from continuing operations are as follows:

	2015		2014		2013
Current
Federal	$	9,814,000	$	10,282,000	$	11,682,000
State		396,000		96,000		(202,000)
Total Current		10,210,000		10,378,000		11,480,000

Deferred
Federal		(125,000)		176,000		365,000
State		39,000		206,000		63,000
Foreign		(20,000)		(96,000)		-
Total Deferred		(106,000)		286,000		428,000

Total Income Tax Expense from Continuing Operations	$	10,104,000	$	10,664,000	$	11,908,000

The total tax provision for the years ended December 31, 2015, 2014, and 2013 was $9.9 million, $4.9 million, $10.0 million, respectively. Those amounts have been allocated to the following financial statement items:

	2015		2014		2013

Income from continuing operations	$	10,104,000	$	10,664,000	$	11,908,000
Income/(loss) from discontinued operations		387,000		(5,302,000)		(1,690,000)
Stockholders' equity, unrealized gain (loss) on investment securities & foreign currency		(357,000)		(182,000)		143,000
Additional paid in capital, share-based compensation tax benefit		(247,000)		(275,000)		(383,000)

Total Income Tax Expense	$	9,887,000	$	4,905,000	$	9,978,000

Deferred tax assets (liabilities) consisted of the following at December 31,

	2015		2014		2013

Reserves on inventory and sales	$	199,000	$	291,000	$	332,000
Credit and loss carryforwards		735,000		699,000		413,000
Stock compensation		1,149,000		1,283,000		896,000
Accrued expenses and deferred costs		1,068,000		3,170,000		1,260,000
Inventory capitalization		49,000		142,000		337,000
Sales tax accrual		-		8,000		337,000
Unrealized gain/loss on investments		85,000		-		-
Total deferred tax assets		3,285,000		5,593,000		3,575,000

Unrealized gain/loss on investments		-		(294,000)		(476,000)
Prepaid expenses		(755,000)		(779,000)		(710,000)
Depreciation		(6,189,000)		(6,285,000)		(7,091,000)
Foreign currency		(23,000)		-		-
Total deferred tax liabilities		(6,967,000)		(7,358,000)		(8,277,000)

Net deferred tax liabilities	$	(3,682,000)	$	(1,765,000)	$	(4,702,000)

The differences between the United States federal statutory tax rate and the Company's effective tax rate are as follows:

	2015				2014				2013
Statutory federal tax	$	10,381,000	35.0	%	$	11,093,000	35.0	%	$	13,665,000	35.0	%
State income taxes, net of federal benefit		414,000	1.4	%		314,000	1.0	%		393,000	1.0	%
Foreign Taxes		15,000	0.1	%		73,000	0.2	%		-	0.0	%
Domestic manufacturer deduction		(824,000)	-2.8	%		(811,000)	-2.6	%		(979,000)	-2.5	%
Other permanent differences		4,000	0.0	%		200,000	0.6	%		173,000	0.4	%
Research and development and jobs credits		(247,000)	-0.8	%		(203,000)	-0.6	%		(459,000)	-1.2	%
Other state income tax benefits		114,000	0.4	%		(113,000)	-0.4	%		(707,000)	-1.8	%
Other		247,000	0.8	%		111,000	0.4	%		(178,000)	-0.4	%
	$	10,104,000	34.1	%	$	10,664,000	33.6	%	$	11,908,000	30.5	%

The 2015, 2014 and 2013 effective tax rates were impacted by the Company’s extensive state income tax planning. This planning includes taking advantage of Maryland’s apportionment methodology. As a manufacturing entity based in Maryland, the Company utilizes the single sales factor apportionment method in addition to claiming new state jobs credits and research & development credits. In 2013 the Company benefited from research and development credits effective January 1, 2013, applicable retroactively to 2012 activity. In 2014 the Company benefited from research and development credits effective January 1, 2014 in addition to filing an amended federal return to claim 2010 research and development credits due to changes in Federal regulations.

The Company has separate company state net operating loss carry forwards totaling $10.9 million start expiring in 2031. Maryland state credits carry forwards totaling $201,000 will begin to expire in 2018.