NOTE 10 - INCOME TAXES

The Company’s 2014 consolidated effective tax rate was 36.50% as compared to 39.33% in 2013.

The Company and its subsidiaries file income tax returns for U.S. Federal and Alabama purposes. The Company is not currently under a tax examination, but the statute of limitations has not yet expired on certain returns. The Company generally remains subject to examination of its U.S. federal income tax returns for 2011 and subsequent years as the IRS has a three year window to assess/collect taxes. In addition, the Company remains subject to examination of its Alabama income tax returns for 2011 and subsequent years. However, if required income taxes are understated by more than 25%, the statute of limitations is extended to 6 years, potentially opening the years of 2008 through 2010 as well.

The income tax provision consists of the following:

Income Taxes:

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


	2014		2013
Current income taxes	$	203,874	$	196,466
Deferred income taxes		170,404		332,080

Provision for income taxes	$	374,278	$	528,546

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


	2014						2013
				Impact on						Impact on
	Amount			Rate			Amount			Rate
Income tax at federal rate	$	348,642			34.00	%	$	456,885			34.00	%
State tax, net of Federal effect		43,334			4.23	%		56,788			4.23	%
Permanent Differences:
Meals & Entertainment		21,722			2.12	%		20,792			1.55	%
Officers Life Insurance		1,337			0.13	%		1,337			0.10	%
Charitable Contribution C/F		—			0.00	%		(646	)		-0.05	%
Domestic Production Activities Deduction		(22,017	)		-2.15	%		(25,954	)		-1.94	%

Total Permanent Differences		1,042			0.10	%		(4,471	)		-0.34	%

NOL Deduction		—			0.00	%		(27,192	)		-2.02	%
Total Tax Credits		(27,214	)		-2.65	%		(20,068	)		-1.49	%
Prior Period over/under accrual		8,475			0.82	%		66,612			4.95	%
Rounding		(1	)		0.00	%		(8	)		0.00	%

Total Provision	$	374,278			36.50	%	$	528,546			39.33	%

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:


	2014			2013
Current Deferred Tax Assets:
Warranty Reserve	$	475,914		$	452,978
Repurchase Reserve		68,449			58,298
Allowance for Loan Losses		35,030			77,201
Allowance for Doubtful Accounts		7,072			5,734
Inventory Reserve		9,552			5,531
Accrued Legal Fees		—			3,823

Total Current Deferred Tax Asset		596,017			603,565

Non-Current Deferred Tax Assets:
Goodwill Impairment		1,509,238			1,706,420

Total Non-Current Deferred Tax Assets		1,509,238			1,706,420

Current Deferred Tax Liabilities:
Prepaid insurance		(17,089	)		(35,872	)

Total Current Deferred Tax Liabilities		(17,089	)		(35,872	)

Non-Current Deferred Tax Liability:
Accelerated Depreciation		(78,168	)		(93,709	)
Sale of Assets		8,468			8,468

Total Non-Current Deferred Tax Liability		(69,700	)		(85,241	)

Total Deferred Tax Assets (Net)	$	2,018,466		$	2,188,872