The Company’s income tax provision for the years ended and consists of the following (in thousands):

 

		Years Ended December 31,
		2017				2016				2015
Current
Federal		$	3,117			$	3,120			$	3,131
State			551				651				580
			3,668				3,771				3,711
Deferred
Federal			(1,091	)			546				508
State			72				30				(71	)
			(1,019	)			576				437
Total income tax provision		$	2,649			$	4,347			$	4,148

 

 

The approximate tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows (in thousands):

 

		December 31,
		2017				2016
Deferred tax assets:
Reserves		$	398			$	531
Inventory capitalization			228				427
Compensation programs			394				578
Retirement liability			7				19
Equity-based compensation			158				257
Net operating loss carryforwards			-				40
Deferred rent			6				7
Intangible assets			274				340
Total deferred tax assets			1,465				2,199
Deferred tax liabilities:
Excess of book over tax basis of fixed assets			(3,305	)			(4,767	)
Goodwill			(600	)			(891	)
Total deferred tax liabilities			(3,905	)			(5,658	)
Net long-term deferred tax liabilities		$	(2,440	)		$	(3,459	)

 

The amounts recorded as deferred tax assets as of and represent the amount of tax benefits of existing deductible temporary differences or carryforwards that are more likely than to be realized through the generation of sufficient future taxable income within the carryforward period. The Company has total deferred tax assets of million at that it believes are more likely than to be realized in the carryforward period. Management reviews the recoverability of deferred tax assets during each reporting period.

 

The actual tax provision for the years presented differs from the “expected” tax provision for those years, computed by applying the U.S. federal corporate rate of to income before income tax expense as follows:

 

		Years Ended December 31,
		2017				2016				2015
Computed “expected” tax rate			34.0	%			34.0	%			34.0	%
Increase (decrease) in income taxes resulting from:
State taxes, net of federal tax benefit			3.5				3.7				2.3
Meals and entertainment			0.3				0.2				0.3
R&D credits			(0.6	)			(0.6	)			(0.8	)
Domestic production deduction			(2.6	)			(2.5	)			(2.5	)
Non-deductible ISO stock option expense			0.1				0.3				0.4
Unrecognized tax benefits			-				(0.1	)			-
Excess tax benefits on equity awards			(1.4	)			-				-
Impact on deferred taxes of new legislation			(11.1	)			-				-
Other			0.1				0.3				1.6
Effective tax rate			22.3	%			35.3	%			35.3	%

 

On the United States enacted tax reform legislation commonly known as the Tax Cuts and Jobs Act (the Tax Act”), resulting in significant modifications to existing law.  Our financial statements for the year ended reflect certain effects of the Tax Act in the quarter of the period in which the legislation was enacted, which includes a reduction in the corporate tax rate from to The interpretations of many provisions of the Tax Act are still unclear. We cannot predict when or to what extent any U.S. federal tax laws, regulations, interpretations, or rulings clarifying the Tax Act will be issued or the impact of any such guidance on us. It is also unclear how many U.S. states, if any, will incorporate these federal law changes, or portions thereof, into their tax codes. Any subsequent changes to state tax laws impact our financial condition. Consistent with Staff Accounting Bulletin (“SAB”) issued by the Securities and Exchange Commission (“SEC”), which provides for a measurement period of year from the enactment date to finalize the accounting for effects of the Tax Act, the Company provisionally recorded an income tax benefit of million related to the Tax Act, including remeasurement of its deferred tax assets and liabilities, and executive compensation limitations under Internal Revenue Code Section (m), among others.  The Internal Revenue Service is expected to issue additional guidance clarifying provisions of the Act.  As additional guidance is issued, or more of the provisional amounts change. In accordance with SEC guidance, provisional amounts be refined as a result of additional guidance from, and interpretations by, U.S. regulatory and standard-setting bodies, and changes in assumptions. In the subsequent period, provisional amounts will be adjusted for the effects, if any, of interpretative guidance issued after by the U.S. Department of the Treasury.

 

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company has been audited by any state for income taxes with the exception of returns filed in Michigan which have been audited through income tax returns filed in Massachusetts which have been audited through income tax returns filed in Florida which have been audited through income tax returns filed in New Jersey which have been audited through and income tax returns in Colorado which have been audited through Federal and state tax returns for the years through remain open to examination by the IRS and various state jurisdictions.

 

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) resulting from uncertain tax positions is as follows (in thousands):

 

		December 31,
		2017				2016
Gross UTB balance at beginning of fiscal year		$	150			$	162
Reductions for tax positions of prior years			-				(12	)
Gross UTB balance at end of fiscal year		$	150			$	150

 

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of and is and respectively.

 

In addition, the total amount of accrued interest and penalties on uncertain tax positions at and is and respectively.

 

At all of the unrecognized tax benefits relate to tax returns of a specific state jurisdiction that are currently under examination. Accordingly, the Company expects a reduction of this amount in as the examination is expected to close within the next -months.