

NOTE 5:	INCOME TAXES

Income tax expense (benefit) from continuing operations is composed of the following:



	Year Ended December 31,
	2015			2014			2013
Current:
Federal	$	8,954		$	—		$	(16	)
State	1,003			229			29
	9,957			229			13
Deferred:
Federal	3,174			5,010			(642		)
State	(904		)	(2,974		)	(85		)
	2,270			2,036			(727		)
Total	$	12,227		$	2,265		$	(714	)

Income tax expense (benefit) also included tax expense (benefit) allocated to comprehensive income (loss) for 2015, 2014, and 2013, of $83, $(198), and $136, respectively (see the Consolidated Statements of Comprehensive Income (Loss)).

A reconciliation of income tax expense (benefit) from continuing operations at the normal statutory federal rate to the provision included in the accompanying Consolidated Statements of Operations is shown below:



	Year Ended December 31,
	2015			2014			2013
"Expected" provision at federal statutory rate	$	13,446		$	9,116		$	(2,282	)
State income taxes, net	1,714			709			(705		)
Change in valuation allowance	(2,385		)	(7,618		)	2,222
Domestic production activity deduction	(1,002		)	—			—
Other	454			58			51
Income tax expense (benefit)	$	12,227		$	2,265		$	(714	)
Effective tax rate	31.8		%	8.7		%	10.9		%

The tax effects of temporary differences giving rise to deferred income taxes shown on the consolidated balance sheets are as follows:



	December 31,
	2015			2014
Deferred income tax assets:
Post-retirement liability	$	1,848		$	1,968
Deferred income	1,343			1,637
Stock based compensation	2,247			2,108
Federal operating loss carryforwards	—			5,029
Capital loss carryforward	1,444			1,311
State tax credits	2,653			2,423
State operating loss carryforwards	2,216			4,574
Inventories	1,684			514
Other	2,224			2,891
Gross deferred income tax assets	$	15,659		$	22,455
Less: valuation allowance	(1,444		)	(3,829		)
Net deferred income tax assets	14,215			18,626
Deferred income tax liabilities:
Fixed assets	(16,050		)	(18,823		)
Other	(922		)	(1,176		)
Gross deferred income tax liabilities	(16,972		)	(19,999		)
Net deferred income tax liability	$	(2,757	)	$	(1,373	)

A schedule of the change in valuation allowance is as follows:



	Valuation allowance
Balance at December 31, 2013	$	11,275
Reductions	7,446
Balance at December 31, 2014	$	3,829
Reductions	2,385
Balance at December 31, 2015	$	1,444

During 2015 and 2014, the Company determined that it is more likely than not that it will realize a portion of its deferred tax assets. This determination was based on the Company's evaluation of the available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income, among other items. The Company's evaluation of the available evidence was significantly influenced by the fact that the Company was in a positive cumulative earnings position for the three year periods ended December 31, 2015 and 2014. The Company recorded a net tax benefit of $2,385 and $7,618 in 2015 and 2014, respectively, due to the release of a portion of its valuation allowance. The remaining valuation allowance as of December 31, 2015, is associated with capital loss carryforwards. The Company determined that utilization of this tax attribute was not more likely than not as of December 31, 2015.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The ASU is effective for public business entities for interim and annual periods in fiscal years beginning after December 15, 2016, however early adoption is permitted. The Company elected to early adopt the ASU on a prospective basis. As a result, the balance sheet classification for 2014 was not adjusted to be consistent with the year end 2015 reporting. The intent of the new standard was to simplify reporting of deferred taxes. As such, the standard allows netting of current and non-current deferred taxes within a reporting jurisdiction and the resulting deferred tax assets and liabilities are presented as non-current in the Company’s Consolidated Balance Sheets at December 31, 2015.

As of December 31, 2015, the Company had approximately $45,900 in gross state net operating loss carryforwards. As of December 31, 2014, the Company had approximately $14,367 and $79,666 of federal and state net operating loss carryforwards, respectively. Due to varying state carryforward periods, the state net operating losses and credit carryforwards will expire between calendar years 2016 and 2035. The Company has a federal capital loss carryforward of $3,658 as of December 31, 2015, which will expire if not used in varying periods between 2016 and 2020.

The Company treats accrued interest and penalties related to tax liabilities, if any, as a component of income tax expense. During 2015, 2014, and 2013, the Company’s activity in accrued interest and penalties was not significant.

The following is a reconciliation of the total amount of unrecognized tax benefits (excluding interest and penalties) for 2015, 2014, and 2013:



	Years Ended December 31,
	2015		2014		2013
Beginning of year balance	$	613	$	566	$	445
Additions for tax positions of prior years	—		8		62
Additions for tax positions of the current year	—		39		59
End of year balance	$	613	$	613	$	566

For each period presented, substantially all of the amount of unrecognized benefits (excluding interest and penalties) would impact the effective tax rate, if recognized. The Company reasonably expects that the amount of unrecognized tax benefit will decrease by approximately $580 in the next 12 months.

The Company’s federal and state income tax returns for calendar year 2012 and forward are open to examination, with the exception of certain net operating losses and credit carryforwards originating in years prior to 2012 that remain subject to adjustment.