Note 10 - Income Tax

12 Months Ended

Dec. 31, 2015

10.	Income Tax

Income tax expense for the years ended December 31, 2013, 2014 and 2015 is summarized below (in thousands):

	For the Years Ended December 31,
	2013		2014		2015
Federal income taxes
Current	$	210	$	230	$	2,552
Deferred		5,528		2,380		1,661
Total federal tax expense		5,738		2,610		4,213
State income taxes
Current		–		14		366
Deferred		629		561		365
Total state tax expense		629		575		731
Total income tax expense	$	6,367	$	3,185	$	4,944

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2015 are presented below (in thousands):

	December 31,
	2014			2015
Deferred tax liabilities:
Amortization	$	(14,871	)	$	(16,107	)
Depreciation		(10,358	)		(10,541	)
Prepaid expense		(600	)		(415	)
State net operating loss carryforwards and adjustments		–			(49	)
Other		(14	)		(13	)
Total deferred tax liabilities	$	(25,843	)	$	(27,125	)

Deferred tax assets:
Amortized intangibles	$	502		$	–
State net operating loss carryforwards and adjustments		27			–
Deferred compensation		297			234
Advance payments		286			266
Bad debt		100			169
Other		551			350
Total net deferred tax assets	$	1,763		$	1,019

As of December 31, 2015, the Company had U.S. federal and state net operating loss carryforwards of $0 and $68 thousand, respectively. As of December 31, 2014, the Company had no U.S. federal or state net operating loss carryforwards. The Company had no alternative minimum tax credit carryforwards as of December 31, 2014 or December 31, 2015. The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of December 31, 2015, the Company had no valuation allowance recorded.

The effective income tax rates as of December 31, 2014 and December 31, 2015 were 38.8% and 39.8%, respectively.

ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For each year ended December 31, 2013, 2014 and 2015, the Company did not identify any material uncertain tax positions. Tax years from 2012 forward remain open for audit.

Total income tax expense was different than that computed by applying U.S. federal income tax rates to income before income taxes for the years ended December 31, 2013, 2014 and 2015. The reasons for the differences are presented below (in thousands, except percentages):

	For the Years Ended December 31,
	2013			2014			2015
Federal income tax at statutory rate		35	%		35	%		35	%

Federal income tax provision at statutory rate	$	40,428		$	2,875		$	4,349
State income tax provision, net of federal income tax effects		408			339			475
Cancellation of debt (non-taxable)		(37,681	)		–			–
Restructuring expense		1,974			–			–
Valuation allowance		1,288			–			–
Other		(50	)		(29	)		120
Provision for income taxes	$	6,367		$	3,185		$	4,944
Effective income tax rate		5.5	%		38.8	%		39.8	%