11. Income Taxes

The components of the income tax provision (benefit) are as follows:


	Year ended December 31, 2011		Year ended December 31, 2010
Current:
Federal tax expense/ (benefit)	$	373	$	729
State tax expense/ (benefit)		3		3
Benefit of net operating loss		—		(437	)

		376		295

Deferred:
Federal tax expense/ (benefit)		289		1,011
State tax expense/ (benefit)		64		57

	$	353	$	1,068

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:

Deferred Tax Asset (Liability):


	Year ended December 31, 2011			Year ended December 31, 2010
Current
Allowance for doubtful accounts	$	10		$	10
Inventory reserve		185			211
Inventory capitalization adjustment		999			971
Accrued expenses		202			148

		1,396			1,340
Long-term
Stock options		33			168
Federal and states NOL carry-forward		25			89
Capital loss carry-forward		—			—
Alternative Minimum Tax credit		—			163
Charitable contributions		—			—
Depreciation and amortization		(3,639	)		(3,307	)
Less valuation allowance		—			—

	$	(3,581	)	$	(2,887	)

FASB ASC 740-10 requires a valuation allowance to reduce the deferred tax assets reported, if based on the weight of evidence, it is more likely than not that some portion or the entire deferred tax asset will not be realized. After consideration of all the evidence, both positive and negative, management has determined that no valuation allowance at December 31, 2011, was necessary.

Effective January 1, 2007, the Company adopted the provisions of FASB ASC 740-10-50, "Accounting for Uncertainty in Income Taxes". The Interpretation provides clarification on accounting for uncertainty in income taxes recognized in an enterprise's financial statements. The Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As a result of the Company's evaluation of the implementation of ASC 740-10-50, no significant income tax uncertainties were identified. Therefore, the Company recognized no adjustment for unrecognized income tax benefits for the year ended December 31, 2011. The tax years subject to examination by the taxing authorities are the years ended December 31, 2011, and December 31, 2010.

In May 2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition of Settlement in FASB Interpretation No. 48" (FSP FIN 48-1). Now codified FASB ASC 740-10-25-9 provides guidance on how to determine whether a tax position is effectively settled for purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is effective retroactively to January 1, 2007. The implementation of this standard did not have a material impact on our consolidated financial position or results of operation.

The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 31, 2011 and December 31, 2010 is as follows:


	Year ended December 31, 2011			Year ended December 31, 2010
Tax at U.S. statutory rate		34	%		34	%
State taxes, net of federal benefit		6			6
Non-deductible items		1			1
Other		-4			8

		37	%		49	%

At December 31, 2011, the cumulative state(s) net operating loss carry-forward of approximately $421 exists, which will expire by 2030.