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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Taxes |
Income Taxes | 9. Income Taxes. Income tax expense consists of the following:
Year Ended December 31 |  | 2015 |  | 2014 |
Current taxes - Federal |  | $ | 903,000 |  | $ | 204,000 |
Current taxes - State |  | 74,000 |  | 37,000 |
Deferred taxes - Federal |  | (4,000 | ) | 51,000 |
Deferred taxes - State |  | 33,000 |  | 6,000 |
Income tax expense |  | $ | 1,006,000 |  | $ | 298,000 |
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 |  | 2015 |  | 2014 |
Federal statutory rate |  | 34.0 | % | 34.0 | %
Stock-based awards |  | 1.2 |  | 12.1 |
State taxes |  | 2.1 |  | 2.3 |
Other permanent differences |  | 0.7 |  | 5.3 |
Impact of uncertain tax positions |  | 1.7 |  | 5.5 |
Other |  | (0.1 | ) | (0.7 | )
Effective federal income tax rate |  | 39.6 | % | 58.5 | %
For the year ended December 31, 2015 the Company has adopted Accounting Standard Update (ASU) 2015-17 to present balance sheet classification of deferred income taxes as noncurrent. As of December 31, 2014, $52,000 of current deferred tax assets were reclassified to noncurrent deferred income tax liabilities. Components of resulting noncurrent deferred tax assets (liabilities) are as follows:
As of December 31 |  | 2015 |  | 2014 |
Deferred tax assets |  |  |  |  |
Accrued expenses |  | $ | 126,000 |  | $ | 68,000 |
Stock-based awards |  | 83,000 |  | 73,000 |
Reserve for bad debts |  | 29,000 |  | 32,000 |
Inventory reserve |  | 12,000 |  | 13,000 |
Net operating loss carryforwards |  | — |  | 32,000 |
Other |  | 9,000 |  | 7,000 |
Total deferred tax assets |  | $ | 259,000 |  | $ | 225,000 |
Deferred tax liabilities |  |  |  |  |
Depreciation |  | $ | (322,000 | ) | $ | (324,000 | )
Prepaid expenses |  | (84,000 | ) | — |
Prepaid compensation |  | (52,000 | ) | (71,000 | )
Total deferred tax liabilities |  | (458,000 | ) | (395,000 | )
Net deferred income tax liabilities |  | $ | (199,000 | ) | $ | (170,000 | )
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 Company has recorded a liability of $528,000 and $486,000 for uncertain tax positions taken in tax returns in previous years as of December 31, 2015 and 2014, 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 2012 and forward are open for examination and assessment by the Internal Revenue Service. With limited exceptions, tax years prior to 2012 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, 2016. A reconciliation of the beginning and ending amount of the liability for uncertain tax positions is as follows:
Balance at January 1, 2014 |  | $ | 458,000 |
Increases due to current year positions |  | 5,000 |
Increases due to interest |  | 23,000 |
Balance at December 31, 2014 |  | 486,000 |
Increases due to current year positions |  | 18,000 |
Increases due to interest |  | 24,000 |
Balance at December 31, 2015 |  | $ | 528,000 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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