BLONDER TONGUE LABORATORIES INC

Note 15 – Income Taxes

The following summarizes the provision (benefit) for income taxes for the years ended December 31, 2016 and 2015:

	2016		2015
Current:
Federal	$	-	$	-
State and local		19		12
		19		12
Deferred:
Federal		(332)		(2,023)
State and local		1,004		(288)
		672		(2,311)
Valuation allowance		(662)		2,345
Provision for income taxes	$	29	$	46

The provision (benefit) for income taxes differs from the amounts computed by applying the applicable Federal statutory rates due to the following for the years ended December 31, 2016 and 2015:

	2016		2015
Provision (benefit) for Federal income taxes at the statutory rate	$	(396)	$	(2,286)
State and local income taxes, net of Federal benefit		12		(379)
Permanent differences:
Stock compensation		-		73
Other		66		23
Deferred tax asset true-up		1,007		-
Change in valuation allowance		(662)		2,345
Other		2		270
Provision for income taxes	$	29	$	46

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2016		2015
Deferred tax assets:
Allowance for doubtful accounts	$	62	$	95
Inventories		1,673		2,161
Intangible		154		162
Share based compensation		68		-
Net operating loss carry forward		9,032		9,227
Other		2		2
Total deferred tax assets		10,991		11,647
Deferred tax liabilities:
Depreciation		(77)		(91)
Intangible		(7)		(8)
Pension liability		(22)		-
Indefinite life intangibles		(139)		(129)
Total deferred tax liabilities		(245)		(228)
		10,746		11,419
Valuation allowance		(10,885)		(11,548)
Net	$	(139)	$	(129)

For the years ended December 31, 2016, the Company had approximately $26,451 and $13,767 of federal and state net operating loss carryovers ("NOL"), respectively, which begin to expire in 2022.

The change in the valuation allowance for the years ended December 31, 2016 and December 31, 2015 was $(662) and $2,345, respectively.

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. The deferred tax liability related to indefinite life intangible assets cannot be used in this determination. Therefore, the deferred tax liability related to indefinite life intangibles acquired in 2012 cannot be considered when determining the ultimate realization of deferred tax assets. The decision to record this valuation allowance was based on management evaluating all positive and negative evidence. The significant negative evidence includes a loss for the current year, a cumulative pre-tax loss for the three years ended December 31, 2016, the inability to carryback the net operating losses, limited future reversals of existing temporary differences and the limited availability of tax planning strategies. The Company expects to continue to provide a full valuation allowance until, or unless, it can sustain a level of profitability that demonstrates its ability to utilize these assets.

The Company had no change in its liability for uncertain tax position during 2016 and no liabilities for uncertain tax positions as of December 31, 2016. ASC 740 discusses the classification of related interest and penalties on income taxes. The Company’s policy is to record interest and penalties incurred in connection with income taxes as a component of income tax expense. No interest or penalties were recorded during the years ended December 31, 2016 and 2015.

The Company is required to file U.S. federal and state income tax returns. These returns are subject to audit by tax authorities beginning with the year ended December 31, 2013.