9.Income Taxes. Income tax expense consists of the following:

Year Ended December 31	2014		2013
Current taxes - Federal	$	204,000	$	816,000
Current taxes - State	37,000		52,000
Deferred taxes - Federal	51,000		139,000
Deferred taxes - State	6,000		39,000

Income tax expense	$	298,000	$	1,046,000

Significant components of the deferred taxes are as follows:

As of December 31	2014			2013
Current Deferred Tax Assets (Liabilities):
Accrued expenses	$	68,000		$	134,000
Allowance for doubtful accounts	32,000			6,000
Inventory reserve	13,000			14,000
Net operating loss carryforwards	3,000			16,000
Prepaid expenses	(71,000		)	—
Other	7,000			1,000

Current deferred tax assets	$	52,000		$	171,000

Long-Term Deferred Tax Assets (Liabilities):
Depreciation	$	(324,000	)	$	(372,000	)
Stock options	73,000			68,000
Net operating loss carryforwards	29,000			20,000

Long-term deferred tax liabilities	$	(222,000	)	$	(284,000	)

The Company evaluates all significant available positive and negative evidence, including the existence of losses in prior years and its forecast of future taxable income, in assessing the need for a valuation allowance. The underlying assumptions the Company uses in forecasting future taxable income require significant judgment and take into account the Company’s recent performance.

The actual tax expense attributable to income before taxes differs from the expected tax expense computed by applying the U.S. federal corporate income tax rate of 34% as follows:

Year Ended December 31	2014		2013
Federal statutory rate	34.0	%	34.0	%

Stock based compensation	12.1		4.9
State taxes	2.3		1.6
Other permanent differences	5.3		0.7
Impact of uncertain tax positions	5.5		1.2
Other	(0.7	)	0.7

Effective federal income tax rate	58.5	%	43.1	%

The Company has recorded a liability of $486,000 and $458,000 for uncertain tax positions taken in tax returns in previous years as of December 31, 2014 and 2013, respectively. This liability is reflected as Accrued Income Taxes on the Company’s Balance Sheets. The Company files income tax returns in the United States and numerous state and local tax jurisdictions. Tax years 2011 and forward are open for examination and assessment by the Internal Revenue Service. With limited exceptions, tax years prior to 2011 are no longer open in major state and local tax jurisdictions. The Company does not anticipate that the total unrecognized tax benefits will change significantly prior to December 31, 2015.

A reconciliation of the beginning and ending amount of the liability for uncertain tax positions is as follows:

Balance at January 1, 2013	$	430,000
Resolution of prior year items	(3,000		)
Increases due to current year positions	10,000
Increases due to interest	21,000
Balance at December 31, 2013	458,000
Increases due to current year positions	5,000
Increases due to interest	23,000
Balance at December 31, 2014	$	486,000