Income Tax Provision

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Provision

6. Income Tax Provision

The income tax provision from operations included in the consolidated statements of operations consists of the following:

	2014			2013
	($000’s omitted)
Current:
Federal	$	379		$	215
State		6			5
		385			220
Deferred:
Federal		(2,039	)		30
State		41			9
		(1,998	)		39
	$	(1,613	)	$	259

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

	2014			2013
Federal statutory rate		34.0	%		34.0	%
Business credits		1.4	%		(9.0	%)
ESOP dividend		-			(2.9	%)
Domestic production activities deduction		(0.6	%)		(2.2	%)
Other		(0.2	%)		0.3	%
State income taxes (less federal effect)		(0.6	%)		0.8	%
Effective tax rate		34.0	%		21.0	%

At December 31, 2014 and 2013, the deferred tax assets (liabilities) were comprised of the following:

	2014			2013
	($000’s omitted)
Inventories	$	493		$	333
Accrued employee compensation and benefit costs		508			458
Accrued arbitration award and related liability		1,903			-
Operating loss and credit carryforwards		287			297
Other		45			64
Minimum pension liability		7			14
Total deferred tax assets		3,243			1,166
Valuation allowance		(295	)		(279	)
Net deferred tax asset		2,948			887
Property, plant and equipment		(691	)		(622	)
Total deferred tax liabilities		(691	)		(622	)
Net deferred tax asset	$	2,257		$	265

In assessing the ability of the Company to realize the benefit of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the level of historical taxable income, the opportunity for net operating loss carrybacks, and projections for future taxable income over the periods which deferred tax assets are deductible, management believes it is more likely than not the Company will generate sufficient taxable income to realize the benefits of these deductible differences at December 31, 2014, except for a valuation allowance of $295,000 ($279,000 – 2013) related to certain state net operating loss carryforwards, state tax credit carryforwards and other state net deferred tax assets. At December 31, 2014, the Company has net operating loss carryforwards with full valuation allowances from Pennsylvania of approximately $2,240,000 ($2,240,000 – 2013) and Arkansas of approximately $2,530,000 ($2,515,000 – 2013), which begin to expire in 2019 and 2015, respectively. The Company also has a New York state tax credit carryforward at December 31, 2014 of approximately $63,000 ($80,000 – 2013), which begins to expire in 2025.

At December 31, 2013, the Company had a net operating loss carryforward with full valuation allowance from New York State of approximately $453,000, which no longer exists due to New York State tax law changes enacted during 2014.

There are no uncertain tax positions or unrecognized tax benefits for 2014 and 2013. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2011 through 2013 Federal and state tax returns remain subject to examination.