Income Tax Provision

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Tax Provision

7. Income Tax Provision

There are no uncertain tax positions or unrecognized tax benefits for 2011 and 2010.

The income tax provision (benefit) for income taxes included in the consolidated statements of income consists of the following:

	2011			2010
	($000’s omitted)
Current:
Federal	$	878		$	929
State		(2	)		14
		876			943
Deferred:
Federal		(167	)		(4	)
State		(40	)		(19	)
		(207	)		(23	)
	$	669		$	920

The reconciliation of the difference between the Company’s effective tax rate based upon the total income tax provision (benefit) and the federal statutory income tax rate is as follows:

	2011			2010
Federal statutory rate		34.0	%		34.0	%
Deferred tax adjustment		(4.9	%)		-
Business credits		(4.1	%)		(1.8	%)
ESOP dividend		(2.1	%)		(1.2	%)
Domestic production activities deduction		(2.1	%)		(1.2	%)
Other		0.3	%		0.5	%
State income taxes (less federal effect)		(0.8	%)		(0.2	%)
Effective tax rate		20.3	%		30.1	%

At December 31, 2011 and 2010, the deferred tax assets (liabilities) were comprised of the following:

		2011			2010
	($000’s omitted)
Inventories	$	380		$	300
Accrued employee compensation and benefit costs		373			347
Operating loss and credit carryforwards		300			59
Other		38			46
Minimum pension liability		39			-
Total deferred tax assets		1,130			752
Valuation allowance		(270	)		(57	)
Net deferred tax asset		860			695
Minimum pension liability		-			(57	)
Property, plant and equipment		(602	)		(580	)
Total deferred tax liabilities		(602	)		(637	)
Net deferred tax asset	$	258		$	58

At December 31, 2011, the Company has New York State net operating loss carryforwards of approximately $453,000 (approximately a $2,000 net tax benefit) that begin to expire in 2019, which is fully reserved for at December 31, 2011. The Company has a State of Pennsylvania net operating loss carryforward of approximately $1,797,000 (approximately a $179,000 net tax benefit) that begins to expire in 2019, which is fully reserved for at December 31, 2011. The Company also has a State of Arkansas net operating loss carryforward of approximately $1,489,000 (approximately a $89,000 net tax benefit) that begins to expire in 2015, which is fully reserved for at December 31, 2011.

During the third quarter of 2009, the New York State Department of Taxation and Finance (NYS) commenced an examination of the Company’s New York State franchise tax returns for the years 2005 through 2007. In the third quarter of 2010, the examination was completed and resulted in no change to the Company’s originally filed returns. Also, during the third quarter of 2010, the Internal Revenue Service commenced an examination of the Company’s Federal income tax returns for the years 2008 and 2009. In the first quarter of 2011, the examination was completed and resulted in no material adjustments to the Company’s originally filed returns. The 2008 through 2010 federal and state tax returns remain open under statute.