9. INCOME TAXES:

The components of income tax expense from operations for fiscal 2014 and fiscal 2013 consisted of the following:

	2014		2013
Current: Federal	$	2,802,495	$	4,099,901
Current: State		446,546		496,793

		3,249,041		4,596,694

Deferred: Federal		351,327		(203,382	)
Deferred: State		31,632		(18,312	)

		382,959		(221,694	)

Income tax expense	$	3,632,000	$	4,375,000

The difference between the Company's income tax expense in the accompanying consolidated financial statements and that which would be calculated using the statutory income tax rate of 35% for both fiscal 2014 and fiscal 2013 on income before income taxes is as follows:

	2014			2013
Tax at statutory rate	$	3,007,036		$	3,581,789
Amortization of goodwill and other intangibles		—			(3,471	)
Nondeductible business expenses		327,665			487,793
State income taxes, net of federal tax benefit		306,014			346,108
Valuation allowance, net operating losses		—			(26,889	)
Other		(8,715	)		(10,330	)

	$	3,632,000		$	4,375,000

Temporary differences between the financial statement carrying balances and tax basis of assets and liabilities giving rise to the net deferred tax asset (liabilities) at fiscal year ends 2014 and 2013 relate to the following:

	2014			2013
Deferred tax assets:
Current:
Allowance for doubtful accounts	$	289,670		$	413,134
Accrued expenses		1,223,381			1,250,868
Inventory		446,554			421,397
Other		—			58,595

		1,959,605			2,143,994
Noncurrent:
Property and equipment	$	139,106		$	82,081
Net operating loss carry forwards—federal		333,800			379,842
Net operating loss carry forwards—state		596,545			596,545

		1,069,451			1,058,468

Total deferred tax assets		3,029,056			3,202,462
Valuation allowance		(586,299	)		(586,299	)

Net deferred tax assets	$	2,442,757		$	2,616,163


Deferred tax liabilities:
Current:
Trade discounts	$	353,437		$	312,061
Noncurrent:
Property and equipment		1,391,625			1,512,677
Goodwill		1,153,863			1,060,943
Intangible assets		1,421,868			1,225,559

		3,967,356			3,799,179

Total deferred tax liabilities	$	4,320,793		$	4,111,240


Net deferred tax assets (liabilities):
Current	$	1,606,168		$	1,831,933
Noncurrent		(3,484,204	)		(3,327,010	)

	$	(1,878,036	)	$	(1,495,077	)

At September 2014, the Company had a $0.3 million noncurrent deferred tax asset related to federal net operating loss carryforwards. These federal net operating loss carryforwards totaled approximately $1.0 million and were primarily attributable to the Company's fiscal 2002 purchase of Hawaiian Natural Water Company, Inc. ("HNWC"), a wholly owned subsidiary of the Company. The utilization of HNWC's net operating losses is limited by Internal Revenue Code Section 382 to approximately $0.1 million per year through 2022.

At September 2014, the Company had a valuation allowance of approximately $0.6 million against certain state net operating losses, which more likely than not will not be utilized. The Company had no material unrecognized tax benefits, interest, or penalties during either fiscal 2014 or fiscal 2013, and the Company does not anticipate any such items during the next twelve months. The Company's policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. and various states and the tax years 2011 and forward remain open under U.S. and state statutes.