NOTE 8. INCOME TAXES

The components of our provision for income taxes for our fiscal years 2014 and 2013 are as follows:

	2014		2013
Current:
Federal	$	1,008,000	$	803,000
State		248,000		218,000
		1,256,000		1,021,000
Deferred:
Federal		63,000		(96,000	)
State		7,000		(10,000	)
		70,000		(106,000	)
	$	1,326,000	$	915,000

A reconciliation of income tax computed at the statutory federal rate to income tax expense is as follows:

	2014			2013

Tax provision at the statutory rate of 34%	$	1,390,000		$	983,000
State income taxes, net of federal income tax		170,000			121,000
FICA tip credit		(256,000	)		(241,000	)
True up adjustment		(7,000	)		22,000
Other permanent items		29,000			30,000
	$	1,326,000		$	915,000

We have deferred tax assets which arise primarily due to depreciation recorded at different rates for tax and book purposes offset by cost basis differences in depreciable assets due to the deferral of the recognition of insurance recoveries on casualty losses for tax purposes, investments in and management fees paid by limited partnerships, accruals for potential uninsured claims, bonuses accrued for book purposes but not paid within two and a half months for tax purposes, the capitalization of certain inventory costs for tax purposes not recognized for financial reporting purposes, the recognition of revenue from gift cards not redeemed within twelve months of issuance, allowances for uncollectable receivables, unfunded limited retirement commitments and tax credit carryforwards generated as a result of the application of alternative minimum taxes.

The components of our deferred tax assets at September 27, 2014 and September 28, 2013 were as follows:

	2014			2013

Current:
Reversal of aged payables	$	27,000		$	27,000
Capitalized inventory costs		29,000			26,000
Accrued bonuses		272,000			222,000
Accruals for potential uninsured claims		89,000			57,000
Gift cards		120,000			108,000
Limited partnership management fees		(94,000	)		27,000
	$	443,000		$	467,000
Long-Term:
Book/tax differences in property and equipment	$	664,000		$	632,000
Limited partnership investments		227,000			299,000
Accrued limited retirement		34,000			40,000
	$	925,000		$	971,000