NOTE 10 – INCOME TAXES

The Company’s 2015 consolidated effective tax rate was 25.6% as compared to 36.5% in 2014.

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 2012 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 2012 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 2009 through 2011 as well.

The income tax provision consists of the following:

Income Taxes:

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


	2015			2014

Current income taxes	$	861,569		$	203,874
Deferred income taxes		(186,993	)		170,404

Provision for income taxes	$	674,576		$	374,278

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


	2015						2014
	Amount			Impact on Rate			Amount			Impact on Rate
Income tax at federal rate	$	895,801			34.00	%	$	348,642			34.00	%
State tax, net of Federal effect		111,343			4.23	%		43,334			4.23	%
Permanent Differences:

Meals & Entertainment		23,666			0.90	%		21,722			2.12	%
Officers Life Insurance		1,226			0.05	%		1,337			0.13	%
Gain on Bargain Sale of Asset		(173,048	)		-6.58	%		—			0.00	%
Domestic Production Activities Deduction		(92,822	)		-3.52	%		(22,017	)		-2.15	%

Total Permanent Differences		(240,978	)		-9.15	%		1,042			0.10	%


Total Tax Credits		(83,131	)		-3.16	%		(27,214	)		-2.65	%
Prior Period over/under accrual		(8,459	)		-0.32	%		8,475			0.82	%
Rounding		—			0.00	%		(1	)		0.00	%

Total Provision	$	674,576			25.60	%	$	374,278			36.50	%

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:


	2015			2014

Current Deferred Tax Assets:
Warranty Reserve	$	558,099		$	475,914
Repurchase Reserve		97,750			68,449
Allowance for Loan Losses		60,149			35,030
Allowance for Doubtful Accounts		7,072			7,072
Inventory Reserve		13,528			9,552
Charitable Contribution C/F		194,025			—

Total Current Deferred Tax Asset		930,623			596,017


Non-Current Deferred Tax Assets:
Goodwill Impairment		1,451,626			1,509,238

Total Non-Current Deferred Tax Assets		1,451,626			1,509,238


Current Deferred Tax Liabilities:
Prepaid insurance		(19,361	)		(17,089	)

Total Current Deferred Tax Liabilities		(19,361	)		(17,089	)


Non-Current Deferred Tax Liability:
Accelerated Depreciation		(165,898	)		(78,168	)
Sale of Assets		8,468			8,468

Total Non-Current Deferred Tax Liability		(157,430	)		(69,700	)


Total Deferred Tax Assets (Net)	$	2,205,458		$	2,018,466