Note 15—INCOME TAXES

Provisions for income taxes for the years ended September 30, 2013 and 2012 are summarized below:

	Years Ended
	September 30,		September 30,
Income Tax Provision	2013		2012
(in thousands)				(restated)
Current tax expense:
State	$	209	$	205
Federal		(80)		216

Deferred tax expense:
State		(557)		65
Federal		(5,094)		3,184

Provision/(benefit) for income taxes	$	(5,522)	$	3,670

Differences between the federal statutory rate and IEC's effective rates of tax for 2013 and 2012 are explained by the following reconciliation.

	Years Ended
	September 30,			September 30,
Taxes as Percent of Pretax Income	2013			2012
				(restated)
Federal statutory rate		(34.0)	%		34.0	%

State income taxes, net of federal benefit		(2.3)			2.4
Increases in tax credits		(1.3)			(0.7)
IRS Audit		0.6			0.1
Other		0.3			(0.4)

Income tax provision/(benefit) as percent of pretax income		(36.7)	%		35.4	%

The following table displays deferred tax assets/liability by category:

	September 30,
Deferred Income Taxes	2013		2012
(in thousands)			(restated)
Deferred tax assets:
Net operating loss carryforward	$	5,913	$	5,068
Alternative minimum tax credit carryforward		870		831
Depreciation and fixed assets		250		-
Amortization and impairment of intangibles		3,610		-
New York State investment tax & other credits		1,186		990
Inventories		737		535
Other		923		1,091
Total before allowance		13,489		8,515
Valuation allowance		(455)		(455)
Deferred tax assets, net		13,034		8,060

Deferred tax liability:
Amortization and impairment of intangibles		-		(472)
Depreciation and fixed assets		-		(205)

Net deferred income taxes (current and long-term)	$	13,034	$	7,383

IEC has federal and state net operating loss carryforwards (“NOLs”) for income tax purposes of approximately $16.2 million and $26.1 million, respectively, at September 30, 2013, expiring mainly in years 2021 through 2025.

In addition, $1.2 million of New York State investment tax and other credits are available to the Company as carryforwards, expiring in various years through 2028. These credits cannot be utilized until the New York net operating loss carryforward is exhausted. We have recorded a valuation allowance for these credits to the extent that we believe it is more likely than not that the tax benefit will not be realized. If the credits expire unused, the related deferred tax asset and offsetting valuation allowance will be reduced.