NOTE 9 – INCOME TAXES

At June 3, 2016 and May 29, 2015 the provision for income taxes consists of the following:

	2016		2015
Current:
Federal	$	1,288,468	$	797,788
State		305,404		187,158

		1,593,872		984,946

Deferred:
Federal		(68,525)		249,191
State		(16,073)		58,452

		(84,598)		307,643

Total	$	1,509,274	$	1,292,589

The effective tax rate for continuing operations differs from the expected tax using statutory rates. A reconciliation between the expected tax and actual tax follows:

	2016		2015

Tax on income at statutory rates	$	1,595,986	$	1,042,483
Increase resulting from:
State income taxes, less Federal income tax effect		181,584		123,525
Other - net		(268,296)		126,581

Total	$	1,509,274	$	1,292,589

The above difference is primarily due to a tax payment rectification. The tax effects of temporary differences that result in net noncurrent deferred tax liabilities are as follows:

	2016		2015

Net noncurrent deferred tax liability
Property and equipment	$	(3,868,351)	$	(3,780,271)
Prepaid expenses		(59,511)		(76,522)
Salary continuation plan		502,070		390,651
Accrued vacation		480,519		476,504
Inventory capitalization		64,399		80,430
Allowance for doubtful accounts		60,800		26,600
Other accrued expenses		187,312		165,248
Net deferred tax liability	$	(2,632,762)	$	(2,717,360)

The Company and its subsidiary are subject to federal income tax as well as income tax of various states. The Company is no longer subject to examination for years before 2012.