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9. INCOME TAXES

12 Months Ended

Dec. 31, 2013

The provision for income taxes consists of:

	Year Ended December 31,
	2013		2012

Current tax expense
Federal	$	406,889	$	581,483
State		114,820		123,458

		521,709		704,941

Deferred tax expense (benefit)
Federal		331,796		(45,512	)
State		51,204		(5,488	)

		383,000		(51,000	)

Total	$	904,709	$	653,941

The effective income tax rate differs from the federal statutory rate as follows:

	Year Ended December 31,
	2013			2012

Federal statutory rate		34.00	%		34.00	%
State taxes, net of federal benefit		5.25	%		4.10	%
Permanent differences		-1.36	%		-1.96	%
Other, primarily prior years		0.97	%		-0.94	%

		38.9	%		35.2	%

Permanent differences consist primarily of tax deductions for domestic production activities and a revaluation of beginning deferred tax assets to reflect a change in state tax rate.

Deferred tax assets and (liabilities) at December 31 consist of:

	2013			2012

Accounts receivable	$	6,000		$	5,000
Deferred gain on sale-leaseback		73,000			83,000
Stock compensation		-			11,000
Other		95,000			53,000

Net current deferred tax assets		174,000			152,000

Prepaids		(38,000	)		(34,000	)
Depreciation		(1,066,000	)		(883,000	)
Inventory		(507,000	)		(289,000	)

Net noncurrent deferred tax liability		(1,611,000	)		(1,206,000	)

Net deferred tax liability	$	(1,437,000	)	$	(1,054,000	)

- 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.

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