NOTE 9—INCOME TAXES

Income Taxes:

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


	Nine months ended September 26, 2015
Current income tax expense	$	458,526
Deferred income tax expense		44,753

Total income tax expense	$	503,279

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


	Nine months ended September 26, 2015
	Amount			Impact on Rate
Income tax expense at federal rate	$	533,867			34.00	%

State tax expense, net of Federal effect		66,356			4.23	%

Permanent Differences:
Meals and entertainment		19,004			1.21	%
Officer’s life insurance		891			0.06	%
Domestic production activities deduction		(51,368	)		-3.27	%
Total tax credits		(56,935	)		-3.63	%

Total permanent differences		(88,408	)		-5.63	%

Prior period adjustment		(8,536	)		-0.55	%

Total income tax expense	$	503,279			32.05	%

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:


	September 26, 2015
Current deferred tax assets:
Warranty reserve	$	523,696
Repurchase reserve		92,925
Loan loss reserve		48,459
Allowance for doubtful accounts		7,072
Inventory reserve		18,335

Total current deferred tax asset		690,487

Non-current deferred tax assets:
Goodwill impairment		1,466,026

Total non-current deferred tax assets		1,466,026

Current deferred tax liabilities:
Prepaid insurance		(36,648	)

Total current deferred tax liabilities		(36,648	)

Non-current deferred tax liability:
Accelerated depreciation		(154,620	)
Sale of assets		8,468

Total non-current deferred tax liability		(146,152	)

Total deferred tax assets (liabilities)—net	$	1,973,713