8. Income Taxes

The items comprising the income tax provision are as follows:

	For the Years Ended December 31,
	2013			2012
Current tax provision:
Federal	$	-		$	1,000
State		800			800
Foreign		7,100			371,100
Current tax provision		7,900			372,900

Deferred tax provision:
Federal		1,838,000			2,310,100
State		1,100			14,700
Decrease in valuation allowance		(158,600	)		-
Deferred tax provision		1,680,500			2,324,800

Total income tax provision	$	1,688,400		$	2,697,700

Total income tax expense differs from the amount that would be provided by applying the statutory federal income tax rate to pretax earnings as illustrated below:

	For the Years Ended December 31,
	2013			2012

Income tax provision at statutory federal income tax rate	$	1,668,100		$	2,681,500
State tax provision, net of federal benefit		19,400			33,200
Prior year withholding tax adjustment		174,600			-
Decrease in valuation allowance		(158,600	)		-
Other		(15,100	)		(17,000	)
Total income tax provision	$	1,688,400		$	2,697,700

Temporary differences and carry-forwards that give rise to a significant portion of deferred tax assets and liabilities as of December 31, 2013 and 2012 were as follows:

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss carryovers	$	-		$	932,000
Foreign tax credit carryover		1,198,100			1,830,000
Unearned revenue		103,800			-
Alternative minimum tax credit		100,800			100,800
Bad debt allowance and other		490,100			936,500
Deferred tax assets		1,892,800			3,799,300
Deferred tax liabilities:
Accumulated depreciation on aircraft and aircraft engines		(17,343,000	)		(17,471,100	)
Minimum lease payments receivable		(649,500	)		(533,200	)
Deferred income		-			(55,600	)
Net deferred tax liabilities before valuation allowance		(16,099,700	)		(14,260,600	)
Valuation allowance		-			(158,600	)
Net deferred tax liabilities	$	(16,099,700	)	$	(14,419,200	)

The foreign tax credit carryover will be available to offset federal tax expense in future years. The foreign tax credit carryover expires beginning in 2016 and extends through 2022. The alternative minimum tax credit will be available to offset federal tax expense in excess of the alternative minimum tax in future years and does not expire.

A significant portion of recognized deferred tax assets relate to foreign tax credit carryovers. The valuation allowance deemed necessary at December 31, 2012 for certain foreign tax credits was reversed in the year ended December 31, 2013. The Company determined that, based on an assessment of all available evidence, it is more likely than not that future taxable income will be sufficient to realize the tax benefits of all the deferred tax assets on the balance sheets at December 31, 2013 and December 31, 2012.

At December 31, 2013 and December 31, 2012, the Company had no material uncertain tax positions.

The Company accounts for interest related to uncertain tax positions as interest expense, and for income tax penalties as tax expense.

All of the Company's tax years remain open to examination other than as barred in the various jurisdictions by statutes of limitation.