Entity information:
12.
 
Income Taxes:
 
The components of the Company
’s provision (benefit) for income taxes from continuing operations were as follows:
 
   
As of December 31
,
  
(in thousands)
  
201
7
    
201
6
    
201
5
  
Current:
                        
Federal
   $
7,695
     $
2,563
     $
(149
 )
State and local
    
666
      
929
      
(752
 )
     
8,361
      
3,492
      
(901
 )
Deferred
    
(10,974
 )    
(1,994
 )    
(5,916
 )
Income tax provision (benefit)
   $
(2,613
 )   $
1,498
     $
(6,817
 )
 
 
T
he components of the Company’s deferred income taxes at
December 31
are as follows:
 
(in thousands
)
  
201
7
    
201
6
  
Deferred tax assets
:
                
Inventory (excluding LIFO reserve
)
   $
1,690
     $
2,531
  
Net operating loss and tax credit carryforward
s
    
3,520
      
3,224
  
Allowance for doubtful account
s
    
419
      
533
  
Accrued expense
s
    
5,684
      
7,228
  
Othe
r
    
143
      
169
  
Deferred tax assets before valuation allowanc
e
    
11,456
      
13,685
  
Valuation allowanc
e
    
(2,379
 )    
(2,017
 )
Total deferred tax asset
s
    
9,077
      
11,668
  
                 
Deferred tax liabilities
:
                
LIFO reserv
e
    
(3,958
 )    
(5,874
 )
Property and equipmen
t
    
(11,363
 )    
(19,846
 )
Intangible
s
    
(5,901
 )    
(9,067
 )
Total deferred tax liabilitie
s
    
(21,222
 )    
(34,787
 )
Deferred tax liabilities, ne
t
   $
(12,145
 )   $
(23,119
 )
 
The following table summarizes the activity related to the Company
’s gross unrecognized tax benefits:
 
(in thousands
)
  
201
7
    
201
6
    
201
5
  
Balance as of January 1
   $
38
     $
38
     $
58
  
Decreases related to prior year tax positions
    
-
      
-
      
(20
 )
Increases related to current year tax positions
    
15
      
13
      
13
  
Decreases related to lapsing of statute of limitations
    
(13
 )    
(13
 )    
(13
 )
Balance as of December 31
   $
40
     $
38
     $
38
  
 
It is expected that the amount of unrecognized tax benefits will
not
materially change in the next
twelve
months. The tax years
20
14
through
2016
remain open to examination by major taxing jurisdictions to which the Company is subject.
 
The Company recognized interest related to uncertain tax positions in income tax expense.
 
The following table reconciles the U.S. federal statutory rate to the Company
’s effective tax rate:
 
   
201
7
    
201
6
    
201
5
  
U.S. federal statutory rate in effect
    
35.0%
      
35.0%
      
35.0%
  
State and local taxes, net of federal benefit
    
3.6%
      
11.8%
      
1.4%
  
Sec. 199 manufacturing deduction
    
(3.8%
 )    
(33.6%
 )    
0.0%
  
Meals and entertainment
    
1.8%
      
64.3%
      
(0.6%
 )
Tax credits
    
(1.3%
 )    
(48.7%
 )    
0.4%
  
Change in valuation allowance
    
0.6%
      
205.4%
      
0.0%
  
Change in U.S. federal statutory rate
    
(37.7%
 )    
0.0%
      
0.0%
  
Change in tax affect of SERP
    
(11.4%
 )    
0.0%
      
0.0%
  
Goodwill impairment
    
0.0%
      
0.0%
      
(17.1%
 )
All other, net
    
(2.8%
 )    
122.4%
      
1.2%
  
Effective income tax rate
    
(16.0%
 )    
356.6%
      
20.3%
  
 
In
2017,
the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section
162
(m) limitations in prior years. Due to the mandatory waiting period of
six
months prior to any SERP payment distribution, in
2017
the Company determined that the Section
162
(m) non-deductibility limitations did
not
apply. The adjustment, which had accumulated since the inception of the SERP in
2005,
resulted in an increase to after-tax income of
$1.9
million in
2017.
  The Company determined that this adjustment was
not
material to its current or prior period consolidated financial statements.
 
On
December
22,
2017,
the President of the United States signed into law the Tax Act. The Tax Act, among other things, lowered the U.S. corporate income tax rate from
35%
to
21%
effective
January 
1,
2018.
Consequently, the Company decreased its net deferred tax liability as of
December 
31,
2017
by
$6.2
 million resulting in an income tax benefit to reflect the estimated impact of the Tax Act. Based on the Company’s predominantly U.S. based operational footprint, additional international and minimum tax provisions under the Tax Act, including the
one
-time transition tax for the transition from the worldwide system to the territorial system, are
not
applicable, or would
not
be material to the Company.
 
The Company believes the calculation of the impact as a result of the
reduced U.S. corporate income tax rate is complete except for changes in estimates that can result from finalizing the filing of its
2017
U.S. income tax return, which are
not
anticipated to be material, and changes that
may
be a direct impact of other provisional amounts recorded due to the enactment of the Tax Act.
 
While the Company has substantially completed
its analysis of the income tax effects of the Tax Act and recorded a reasonable estimate of such effects, certain items related to the Tax Act
may
differ, possibly materially, due to further refinement of the calculations, changes in interpretations and assumptions made, additional guidance that
may
be issued by the U.S. government, and actions related to accounting policy decisions the Company
may
make as a result of the Tax Act. The Company will complete its analysis of these items over a
one
-year measurement period ending
December 22, 2018,
and any adjustment provided by the SEC under SAB
118
during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense (benefit) in the reporting period when such adjustments are determined.
 
The Company's
effective tax rate was disproportionately high in
2016
from comparative periods due to low income before taxes relative to items that impact the effective tax rate.  During
2016,
the Company recorded a valuation allowance of
$0.9
million to reduce certain state deferred tax assets to the amount that is more likely than
not
to be realized.
 
Income t
axes paid in
2017,
2016
and
2015
totaled
$9.4
million,
$1.0
million and
$0.6
million, respectively. Some subsidiaries of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss carryforwards expiring over the next
seven
to
20
years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than
not
to be realized.