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3-Income Taxes
 12 Months Ended
Dec. 31, 2012
3-Income Taxes:  
3-Income Taxes

3—Income Taxes—The provision for income tax expense consists of the following:

 

 

 

2012

 

2011

Current:

 

 

 

  Federal………………………………………………………….

$  624,000

 

$    585,000

  State…………………………………………………………….

42,000

 

12,000

Deferred………………………………………………………….

171,000

 

14,000

 

$  837,000

 

$  611,000

 

The following is a reconciliation of the statutory federal income tax rate to the actual effective tax rate:

 

 

 

2012

 

 

 

2011

 

 

 

Amount

 

%

 

Amount

 

%

Expected tax at U.S. Statutory rate…………

$  878,000

 

34. 0

 

$  634,000

 

34.0

Permanent differences………………………

(69,000)

 

(2.7)

 

(31,000)

 

(1.7)

State taxes, net of federal benefit………….

28,000

 

1.1

 

8,000

 

.4

Income tax expense…………………………

$  837,000

 

32.4

 

$  611,000

 

32.7

 

The Company’s effective tax rates were lower than the U.S. federal statutory rate in 2012 and 2011 primarily due to the Domestic Production Activities Deduction allowed under Internal Revenue Code Section 199.

 

The deferred tax liabilities and assets consist of the following:

 

 

2012

 

2011

 

 

 

 

Depreciation and amortization………………………………..

$  (952,275)

 

$  (785,275)

Inventory………………………………………………………..

274,826

 

285,516

Accrued vacation………………………………………………

89,785

 

88,045

Allowance for doubtful accounts……………………………..

51,450

 

48,000

Other, net……………………………………………………….

130

 

(1,370)

 

416,191

 

420,191

 

$  (536,084)

 

$  (365,084)

 

Valuation allowances related to deferred taxes are recorded based on the “more likely than not” realization criteria.  The Company reviews the need for a valuation allowance on a quarterly basis for each of its tax jurisdictions.  A deferred tax valuation allowance was not required at December 31, 2012 or 2011.