Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

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

	2015		2014
	($000’s omitted)
Current:	$	387	$	379
Federal		3		6
State		390		385
Deferred:		1,741		(2,039	)
Federal		-		41
State		1,741		(1,998	)
	$	2,131	$	(1,613	)

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:

	2015			2014
Federal statutory rate		34.0	%		34.0	%
Business credits		(1.8	%)		1.4	%
ESOP dividend		(0.4	%)		-
Domestic production activities deduction		(0.2	%)		(0.6	%)
Other		0.1	%		(0.2	%)
State income taxes (less federal effect)		-			(0.6	%)
Effective tax rate		31.7	%		34.0	%

At December 31, 2015 and 2014, the deferred tax assets (liabilities) were comprised of the following:

	2015			2014
	($000s omitted)
Deferred tax assets:
Inventories	$	665		$	493
Accrued employees compensation and benefits costs		612			508
Accrued arbitration award and related liability		160			1,903
Net operating loss and credit carryforwards		388			287
Other		52			45
Minimum pension liability		2			7
Total deferred tax assets		1,879			3,243
Valuation allowance		(397	)		(295	)
Net deferred tax asset		1,482			2,948
Deferred tax liabilities:
Property, plant and equipment		(972	)		(691	)
Total deferred tax liabilities		(972	)		(691	)
Net deferred tax asset	$	510		$	2,257

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, 2015, except for a valuation allowance of $397,000 ($295,000 – 2014) related to certain state net operating loss carryforwards, state tax credit carryforwards and other state net deferred tax assets. At December 31, 2015, the Company has net operating loss carryforwards with full valuation allowances from Pennsylvania of approximately $2,240,000 ($2,240,000 – 2014) and Arkansas of approximately $2,530,000 ($2,530,000 – 2014), which begin to expire in 2019 and 2016, respectively. The Company also has a New York state tax credit carryforward at December 31, 2015 of approximately $217,000 ($63,000 – 2014), which begins to expire in 2025.

There are no uncertain tax positions or unrecognized tax benefits for 2015 and 2014. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2012 through 2014 Federal and state tax returns remain subject to examination.