INCOME TAXES

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. Income tax expense (benefit) attributable to income from continuing operations differed from the amounts computed by applying the U.S. federal income tax of 34% to pretax income from continuing operations as a result of the following for the years ended December 31, 2014, 2013 and 2012:



	December 31, 2014			December 31, 2013			December 31, 2012
Statutory tax on book income	$	(1,996,000	)	$	2,136,000		$	768,000
Permanent differences	52,000			(746,000		)	44,000
Net operating loss utilization	—			(969,000		)	(812,000		)
Change in valuation allowance	922,000			(1,700,000		)	(1,408,000		)
Other	1,033,763			(421,000		)	7,359
Income tax expense (benefit)	$	11,763		$	(1,700,000	)	$	(1,400,641	)

The components of income tax (benefit) expense for the years ended December 31, 2014 and 2013, and 2012 are as follows:



	December 31, 2014		December 31, 2013			December 31, 2012
Current federal tax expense	$	11,763	$	244,000		$	31,359
Deferred federal tax benefit	—		(1,944,000		)	(1,432,000		)
Total federal tax expense (benefit)	$	11,763	$	(1,700,000	)	$	(1,400,641	)

The cumulative tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013, and 2012 are presented below:



	December 31, 2014			December 31, 2013			December 31, 2012
Deferred tax assets:
Alternative minimum tax credits	$	220,000		$	220,000		$	130,000
Allowance for doubtful accounts	684,000			—			—
Accrued compensation	560,000			233,000			173,000
Contribution carryover	37,000			—			—
Net operating loss carry forwards	14,167,000			10,482,000			11,536,000
Less valuation allowance	(6,173,000		)	(5,251,000		)	(8,136,000		)
Net deferred tax assets	$	9,495,000		$	5,684,000		$	3,703,000

	December 31, 2014			December 31, 2013			December 31, 2012
Deferred tax liabilities:
Accelerated tax depreciation	$	(4,189,000	)	$	(378,000	)	$	(341,000	)
Net deferred tax liabilities	$	(4,189,000	)	$	(378,000	)	$	(341,000	)

The Company has determined that a valuation allowance of approximately $6,173,000 at December 31, 2014 is necessary to reduce the deferred tax assets to the amount that will more than likely not be realized.

The Company is subject to examination by Federal and State tax authorities for fiscal years 2011 through 2014.

At December 31, 2014, the Company had federal net operating loss carry-forwards ("NOLs") of approximately $41.7 million acquired as part of the Merger between World Waste and the Company's wholly-owned subsidiary Vertex Merger Sub, LLC. It is possible that the Company may be unable to use these NOLs in their entirety. The history of these NOLs and the related tax laws are complex and the Company is researching the facts and circumstances as to whether the Company will ultimately be able to utilize the benefit from these NOLs. The extent to which the Company will be able to utilize these carry-forwards in future periods is subject to limitations based on a number of factors, including the number of shares issued within a three-year look-back period, whether the merger is deemed to be a change in control, whether there is deemed to be a continuity of World Waste's historical business, and the extent of the Company's subsequent income. The net operating loss carryforward will begin to expire in 2026.