NOTE 7 – INCOME TAXES

At May 29, 2015 and May 30, 2014 the provision for income taxes consists of the following:

	2015		2014
Current:
Federal	$	797,788	$	786,126
State		187,158		184,400

		984,946		970,526

Deferred:
Federal		249,191		(241,758	)
State		58,452		(56,709	)

		307,643		(298,467	)

Total	$	1,292,589	$	672,059

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:

	2015		2014

Tax on income at statutory rates	$	1,042,483	$	541,921
Increase resulting from:
State income taxes, less Federal income tax effect		123,525		121,704
Other - net		126,581		8,434

Total	$	1,292,589	$	672,059

The tax effects of temporary differences that result in deferred tax assets and liabilities are as follows:

	2015		2014
Deferred tax assets
Salary continuation plan	$	390,651	$	430,599
Accrued vacation		476,504		557,032
Inventory capitalization		80,430		96,923
Allowance for doubtful accounts		26,600		26,600
Other accrued expenses		165,248		284,350

Gross deferred tax assets before valuation allowance		1,139,433		1,395,504
Less valuation allowance		-		-

Total deferred tax assets		1,139,433		1,395,504

Deferred tax liabilities
Property and equipment		3,780,271		3,700,884
Prepaid expenses		76,522		104,337
Total deferred tax liabilities		3,856,793		3,805,221

Net deferred tax liability	$	2,717,360	$	2,409,717

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 2011.