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