7. Income Taxes

Deferred income taxes are provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and those for income tax reporting purposes. Deferred income tax (assets) liabilities relate to:

	2013			2012			2011
Property, plant and equipment	$	6,184,873		$	5,942,048		$	5,480,102
Other		208,938			—			—
Total deferred income tax liabilities		6,393,811			5,942,048			5,480,102

Other postretirement benefits		(787,087	)		(885,729	)		(653,238	)
Inventories		(848,364	)		(761,613	)		(1,005,134	)
Allowance for doubtful accounts		(104,695	)		(104,903	)		(94,120	)
Intangible assets		(373,482	)		(422,443	)		(472,243	)
Accrued compensation		(158,866	)		(197,582	)		(224,155	)
Pensions		(3,828,224	)		(7,128,057	)		(5,573,596	)
Other		—			(116,826	)		(160,876	)
Total deferred income tax assets		(6,100,718	)		(9,617,153	)		(8,183,362	)
Net deferred income tax (assets) liabilities	$	293,093		$	(3,675,105	)	$	(2,703,260	)

Income before income taxes consists of:

	2013		2012		2011
Domestic	$	7,139,039	$	8,614,664	$	5,180,467
Foreign		2,974,856		4,609,854		3,326,462
	$	10,113,895	$	13,224,518	$	8,506,929

The provision for income taxes follows:

	2013			2012		2011
Current:
Federal	$	1,942,271		$	1,909,172	$	214,988
Foreign		871,949			1,367,025		830,028
State		162,952			220,820		109,711
Deferred:
Federal		241,821			1,022,660		1,747,620
Foreign		—			—		—
State		(7,019	)		79,041		99,652
	$	3,211,974		$	4,598,718	$	3,001,999

A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:

	2013						2012						2011
	Amount			Percent			Amount			Percent			Amount			Percent
Income taxes using U.S. federal statutory rate	$	3,438,724			34	%	$	4,496,336			34	%	$	2,892,356			34	%
State income taxes, net of federal benefit		99,245			1			188,490			2			133,201			2
Impact of foreign subsidiaries on effective tax rate		(103,878	)		(1	)		136,590			1			21,329			-
Impact of manufacturers deduction on effective tax rate		(138,127	)		(1	)		(232,928	)		(2	)		(50,537	)		(1	)
Other—net		(83,990	)		(1	)		10,230			-			5,650			-
	$	3,211,974			32	%	$	4,598,718			35	%	$	3,001,999			35	%

Total income taxes paid were $2,568,708 in 2013, $3,350,283 in 2012 and $1,631,299 in 2011.

United States income taxes have been provided on the undistributed earnings of foreign subsidiaries ($13,791,838 at December 28, 2013) only where necessary because such earnings are intended to be reinvested abroad indefinitely or repatriated only when substantially free of such taxes. The Company would be required to accrue and pay United States income taxes to repatriate the funds held by foreign subsidiaries not otherwise provided.

During 2013, 2012 and 2011, the Company received tax benefits of $0, $0 and $106,000, respectively, as a result of the exercise and sale of incentive stock options that resulted in the disqualification of those incentive stock options, and the exercise of non-qualified stock options during the year. The tax benefit associated with the exercise of the incentive and non-qualified stock options has been recorded to common stock.

A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:

	2013			2012			2011

Balance at beginning of year	$	499,624		$	486,332		$	495,843
Increases for positions taken during the current period		49,636			119,893			25,398
Decreases relating to settlements		(263,856	)		—			—
Decreases resulting from the expiration of the statute of limitations		(65,115	)		(106,601	)		(34,909	)
Balance at end of year	$	220,289		$	499,624		$	486,332

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2010 and non-U.S. income tax examinations by tax authorities prior to 2007.

Included in the balance at December 28, 2013, are $145,391 of unrecognized tax benefits that would affect the annual effective tax rate. In 2013, the Company recognized accrued interest related to unrecognized tax benefits in income tax expense. The Company had approximately $28,000 of accrued interest at December 28, 2013.

The total amount of unrecognized tax benefits could increase or decrease within the next twelve months for a number of reasons, including the closure of federal, state and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under ASC 740. The Company believes that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.