(7)	Income Taxes

The components of income (loss) before income taxes and dividends on preferred stock for the years ended December 31, 2014 and 2013 were as follows:

	2014		2013
	(in thousands)
United States	$	(7,255)	$	2,240
Foreign		2,194		3,024
	$	(5,061)	$	5,264

The components of the provision (benefit) for income taxes by taxing authority for the years ended December 31, 2014 and 2013 were as follows:

	2014		2013
	(in thousands)
Current provision:
Federal	$	—	$	—
Foreign		—		—
States		—		141
Total current provision		—		141
Deferred provision (benefit):
Federal		(309)		536
Foreign				—
States		(25)		36
Total deferred provision (benefit):		(334)		572
	$	(334)	$	713

Significant components of the Company’s deferred federal income taxes were as follows:

	At December 31,
	2014				2013
	Current		Non-Current		Current		Non-Current
	(in thousands)				(in thousands)
Deferred tax assets:
Accrued liabilities	$	161	$	—	$	413	$	—
Deferred compensation		—		726		—		686
Allowance for doubtful accounts		111		—		120		—
Inventory		122		—		270		—
Long-term contracts		—		—		149		—
Net operating loss		—		3,848		—		2,909
Intangible assets		—		—		—		86
Foreign tax credit carry forward		—		2,811		—		1,153
Valuation allowance		—		(7,845)		—		(5,385)
Deferred tax assets		394		(460)		952		(551)
Deferred tax liabilities:
Equity in foreign investments		—		(2,900)		—		(3,233)
Property and equipment		—		66		—		(147)
Intangible assets		—		—		—		(9)
Translation gain		—		(523)		—		(553)
Deferred tax liabilities				(3,357)		—		(3,942)
Net deferred tax assets (liabilities)	$	394	$	(3,817)	$	952	$	(4,493)

The provision for income taxes for the year ended December 31, 2014 was primarily a non-cash savings of $0.3 million and reflect 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, 2014 and 2013 due to uncertainty regarding future realization of deferred tax assets. Our total valuation allowance as of December 31, 2014 and 2013 is $7.8 million and $5.4 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:

	2014		2013
	(in thousands)
(Provision for) benefit from U.S federal statutory rate	$	1,611	$	(1,798)
Effect of state income taxes		35		(141)
Non-deductible business meals and entertainment expenses		(486)		(18)
Foreign income taxes included in equity in earnings		1,400		551
Adjustment of net operating loss carry forwards based on IRS audit, accrual to return adjustments and other		(12)		(153)
Change in valuation allowance		(2,214)		846
Total (Expense)	$	334	$	(713)

The Company files income tax returns in the United States Federal jurisdiction and various state jurisdictions.