9. INCOME TAXES.

Federal and State income tax expense (benefit) from continuing operations consist of the following:

	2013			2012			2011
Federal:
Current	$	1,439,346		$	665,615		$	(91,975	)
Deferred	1,253,385			372,886			—
	2,692,731			1,038,501			(91,975		)

State:
Current	360,800			(150,354		)	(309,025		)
Deferred	(194,216		)	(1,198,337		)	—
	166,584			(1,348,691		)	(309,025		)
Total	$	2,859,315		$	(310,190	)	$	(401,000	)

Deferred tax assets and deferred tax liabilities were as follows:

	2013			2012
Deferred tax assets:
Receivables	$	20,020		$	38,500
Inventories	937,161			1,544,285
Accrued liabilities	1,687,924			1,560,629
State net operating losses and credit carryforwards	1,615,046			1,269,848
Other	186,864			170,050
Total deferred tax assets	4,447,015			4,583,312

Deferred tax liabilities:
Depreciation	(3,862,862		)	(2,919,247		)
Prepaids and other	(817,871		)	(838,614		)
Total deferred tax liabilities	(4,680,733		)	(3,757,861		)
Net deferred tax assets (liabilities)	$	(233,718	)	$	825,451

At December 28, 2013, the Company had state tax loss carryforwards of approximately $21 million available to offset future taxable income, expiring in various amounts through December 31, 2032.

A reconciliation of the tax provision for income taxes from continuing operations at the U.S. Statutory rate (34% in 2013, 35% in 2012 and 34% in 2011) to the effective income tax expense rate as reported is as follows:

	2013		2012		2011
U.S. Federal statutory rate	34.0	%	35.0	%	34.0	%
State income taxes, net of federal benefit	1.2		2.9		(16.1	)
Tax-exempt underwriting income of wholly-owned small captive insurance subsidiary	(2.4	)	—		—
Domestic production deduction	(1.8	)	(2.6	)	—
Research and development tax credits	(1.1	)	—		(11.7	)
Alternative fuel tax credit	(0.4	)	—		(6.9	)
Stock-based compensation	0.1		0.3		(2.8	)
Change in valuation allowance	—		(39.8	)	(28.4	)
Other, net	1.2		1.5		0.2
Effective Tax Rate	30.8	%	(2.7	)%	(31.7	)%

Uncertain Tax Positions

The Company recognizes income tax benefits only when it is more likely than not that the tax position will be allowed upon examination by taxing authorities, which is presumed to occur. The amount of such tax benefit recorded is the largest amount that is more likely than not to be allowed. A reconciliation of the change in the unrecognized tax benefits for the three years ended December 28, 2013 is as follows:

Unrecognized tax benefits at December 26, 2010	$	1,040,054
Gross increases - tax positions in prior periods	80,558
Lapse of statute of limitations	(401,000		)
Unrecognized tax benefits at December 31, 2011	719,612
Gross increases - tax positions in prior periods	22,430
Lapse of statute of limitations	(222,431		)
Unrecognized tax benefits at December 29, 2012	519,611
Gross increases - tax positions in prior periods	197,310
Lapse of statute of limitations	(57,921		)
Unrecognized tax benefits at December 28, 2013	$	659,000

The entire balance of approximately $659,000 at December 28, 2013 relates to unrecognized tax positions that, if recognized, would affect the annual effective tax rate. The Company is subject to U.S. federal income tax as well as various state taxes. The Company is no longer subject to examination by federal taxing authorities for the fiscal year ended 2009 and earlier. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease over the next twelve months. Interest and penalties related to income tax matters are recognized in income tax expense. Interest and penalties accrued for, and recognized during, the fiscal years ended 2013, 2012, and 2011 were immaterial.