NOTE 9 - INCOME TAXES

Income Taxes:

The components of the provision for income taxes are as follows:


	Six months ended June 28, 2014
	(unaudited)

Current income tax (benefit)	$	(196,900	)
Deferred income tax expense		188,468

Total income tax benefit	$	(8,432	)

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes are as follows:


	Six months ended June 28, 2014
	(unaudited)
	Amount			Impact on Rate
Income tax (benefit) at federal rate	$	(18,332	)		34.00	%
State tax benefit, net of Federal effect		(2,279	)		4.23	%
Permanent Differences:
Meals and entertainment		10,440			-19.36	%
Officer’s life insurance		669			-1.24	%

Total permanent differences		11,109			-20.60	%

Prior period over/under accrual		1,070			-1.98	%

Total income tax (benefit)	$	(8,432	)		15.65	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred income taxes are as follows:


	June 28, 2014
	(unaudited)

Current Deferred Tax Assets:
Warranty reserve	$	437,688
Repurchase reserve		64,579
Loan loss reserve		50,156
Allowance for doubtful accounts		9,557
Inventory reserve		6,758

Total Current Deferred Tax Asset		568,738


Non-Current Deferred Tax Assets:
Goodwill impairment		1,584,564

Total Non-Current Deferred Tax Assets		1,584,564


Current Deferred Tax Liability:
Prepaid insurance		(48,544	)

Total Current Deferred Tax Liability		(48,544	)


Non-Current Deferred Tax Liability:
Accelerated depreciation		(112,823	)
Sale of assets		8,468

Total Non-Current Deferred Tax Liability		(104,355	)

Total Deferred Tax Assets (Liabilities) - Net	$	2,000,403