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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Taxes |
(7) | Income Taxes
The components of income (loss) before income taxes for the years ended December 31, 2013 and 2012 were as follows:
| 2013 |  |  | 2012 |
| (in thousands) |
United States | $ | 2,240 |  |  | $ | (72 | )
Foreign |  | 3,024 |  |  |  | 3,088 |
| $ | 5,264 |  |  | $ | 3,016 |
The components of the provision (benefit) for income taxes by taxing authority for the years ended December 31, 2013 and 2012 were as follows:
| 2013 |  |  | 2012 |
| (in thousands) |
Current provision: |  |  |  |  |  |  |
Federal | $ | — |  |  | $ | — |
Foreign |  | — |  |  |  | 101 |
States |  | 141 |  |  |  | — |
Total current provision |  | 141 |  |  |  | 101 |
Deferred provision (benefit): |  |  |  |  |  |  |
Federal |  | 536 |  |  |  | 671 |
Foreign |  | — |  |  |  | (101 | )
States |  | 36 |  |  |  | 36 |
Total deferred provision (benefit): |  | 572 |  |  |  | 606 |
| $ | 713 |  |  | $ | 707 |
Significant components of the Company’s deferred federal income taxes were as follows:
| At December 31, |
| 2013 |  |  | 2012 |
| Current |  |  | Non-Current |  |  | Current |  |  | Non-Current |
| (in thousands) |  |  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accrued liabilities | $ | 413 |  |  | $ | — |  |  | $ | 159 |  |  | $ | — |
Deferred compensation |  | — |  |  |  | 686 |  |  |  | — |  |  |  | 363 |
Allowance for doubtful accounts |  | 120 |  |  |  | — |  |  |  | 101 |  |  |  | — |
Inventory |  | 270 |  |  |  | — |  |  |  | 388 |  |  |  | — |
Long-term contracts |  | 149 |  |  |  | — |  |  |  | 80 |  |  |  | — |
Net operating loss |  | — |  |  |  | 2,909 |  |  |  | — |  |  |  | 4,205 |
Intangible assets |  | — |  |  |  | 86 |  |  |  | — |  |  |  | 111 |
Foreign tax credit carry forward |  | — |  |  |  | 1,153 |  |  |  | — |  |  |  | 1,017 |
Valuation allowance |  | — |  |  |  | (5,385 | ) |  |  | (728 | ) |  |  | (5,750 | )
Deferred tax assets |  | 952 |  |  |  | (551 | ) |  |  | — |  |  |  | (54 | )
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity in foreign investments |  | — |  |  |  | (3,233 | ) |  |  | — |  |  |  | (2,756 | )
Property and equipment |  | — |  |  |  | (147 | ) |  |  | — |  |  |  | 61 |
Intangible assets |  | — |  |  |  | (9 | ) |  |  | — |  |  |  | (9 | )
Translation gain |  | — |  |  |  | (553 | ) |  |  | — |  |  |  | (411 | )
Deferred tax liabilities |  | — |  |  |  | (3,942 | ) |  |  | — |  |  |  | (3,115 | )
Net deferred tax assets (liabilities) | $ | 952 |  |  | $ | (4,493 | ) |  | $ | — |  |  | $ | (3,169 | )
The provision for income taxes for the year ended December 31, 2013 was primarily a non-cash expense of $0.7 million which reflects deferred taxes associated with the Company’s foreign joint ventures. The Company’s deferred tax assets are primarily related to net operating loss carry forwards. These net operating losses include losses generated by American Access Technologies. Inc. (“AAT”), prior to the Company’s merger in 2007, additional net operating losses, and foreign tax credit carry forwards. A valuation allowance was established at December 31, 2013 and 2012 due to uncertainty regarding future realization of deferred tax assets. Our total valuation allowance as of December 31, 2013 and 2012 is $5.6 million and $6.4 million, respectively. The Company has federal net operating loss carry forwards of approximately $7.4 million which include $7.4 million acquired from AAT that are subject to the utilization limitation under Section 382 of the Internal Revenue Code. The Company has state net operating losses of $11 million. These tax loss carry forwards are available to offset future taxable income and expire if unused during the federal tax year ending December 31, 2019 through 2031. The Company’s 2008 U.S. federal income tax return was examined by the Internal Revenue Service (“IRS”). In the fourth quarter 2011, the IRS concluded its audit which adjusted the annual net operating loss carry forward limitation under Sec. 382 related to AAT’s pre-acquisition net operating loss carry forwards to $299,000 per year through 2027. The Company has adopted the provisions of ASC Topic 740-10 “Income Taxes” to assess tax benefits claimed on a tax return should be recorded in the financial statements. The Company has assessed all open tax years and has recorded no uncertain tax positions related to the open tax years. The difference between the effective income tax rate reflected in the provision for income taxes and the amounts, which would be determined by applying the statutory income tax rate of 34%, is summarized as follows:
| 2013 |  |  | 2012 |
| (in thousands) |
(Provision for) benefit from U.S federal statutory rate | $ | (1,798 | ) |  | $ | (1,032 | )
Effect of state income taxes |  | (141 | ) |  |  | (49 | )
Non-deductible business meals and entertainment expenses |  | (18 | ) |  |  | (95 | )
Foreign income taxes included in equity in earnings |  | 551 |  |  |  | — |
Adjustment of net operating loss carry forwards based on IRS audit, accrual to return adjustments and other |  | (153 | ) |  |  | — |
Change in valuation allowance |  | 846 |  |  |  | 469 |
Total (Expense) | $ | (713 | ) |  | $ | (707 | )
The Company files income tax returns in the United States. Federal jurisdiction and various state jurisdictions.

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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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