10. Income Taxes

The provision for income tax expense (benefit) consists of the following:



	Year ended December 31
	2014		2013		2012
Current:
Federal	$	17,347	$	712	$	(3,994)
State		1,774		(190)		289
		19,121		522		(3,705)
Deferred:
Federal		2,025		5,582		7,375
State		890		1,274		474
		2,915		6,856		7,849
	$	22,036	$	7,378	$	4,144

A reconciliation of income tax expense computed at the federal statutory rate to the provision for income taxes for the years ended December 31, 2014, 2013 and 2012 is as follows:



	2014		2013		2012
Federal income tax expense at statutory rate	$	21,699	$	6,656	$	3,555
State taxes, net of federal benefit		1,694		236		218
Valuation allowance changes		-		-		451
Change in uncertain tax positions, net		8		8		8
Research and development credit		(249)		(305)		(26)
Rate change		366		758		67
Manufacturing tax benefits		(1,612)		(44)		-
Other		130		69		(129)
	$	22,036	$	7,378	$	4,144

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



	December 31,
	2014		2013
Deferred tax assets:
Allowance for doubtful accounts	$	619	$	401
Inventory reserves		775		638
Warranty liability		2,289		1,455
Deferred compensation		676		570
Earnout liabilities		1,347		1,531
Pension and retiree health benefit obligations		4,657		(869)
Accrued vacation		620		587
Medical claims reserve		155		263
State net operating losses		2,417		3,294
Other accrued liabilities		4,027		865
Valuation allowance for state net operating losses		(1,600)		(1,395)
Total deferred tax assets		15,982		7,340
Deferred tax liabilities:
Tax deductible goodwill and other intangibles		(52,409)		(45,872)
Accelerated depreciation		(5,978)		(2,040)
Other		(444)		(251)
Total deferred tax liabilities		(58,831)		(48,163)
Net deferred tax liabilities	$	(42,849)	$	(40,823)

Deferred income tax balances reflect the effects of temporary differences between the carrying amount of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered.

State operating loss carry forwards for tax purposes will result in future tax benefits of approximately $2,417. These loss carry-forwards will begin to expire in 2021. The Company evaluated the need to maintain a valuation allowance against certain deferred tax assets. Based on this evaluation, which included a review of recent profitability, future projections of profitability, and future deferred tax liabilities, the Company concluded that a valuation allowance of approximately $1,600 is necessary at December 31, 2014 for the state net operating loss carry-forwards which are likely to expire prior to the Company's ability to use the tax benefit.

A reconciliation of the beginning and ending liability for uncertain tax positions is as follows:



	2014		2013
Balance at beginning of year	$	336	$	328
Increases for tax positions taken in the current year		248		-
Increases for tax position taken in prior years		8		8
Balance at the end of year	$	592	$	336

The amount of the unrecognized tax benefits that would affect the effective tax rate, if recognized, was approximately $361 at December 31, 2014. The Company recognizes interest and penalties related to the unrecognized tax benefits in income tax expense. Approximately $100 and $70 of accrued interest and penalties is reported as an income tax liability at December 31, 2014 and 2013, respectively. The liability for unrecognized tax benefits is reported in Other Long‑term Liabilities on the consolidated balance sheets at December 31, 2014 and 2013.

The Company files income tax returns in the United States (Federal), Wisconsin (state), Maine (state) and various other states. Tax years open to examination by tax authorities under the statute of limitations include 2013 for Federal and 2010 through 2013 for most states. Tax returns for the 2014 tax year have not yet been filed.