12. INCOME TAXES

The provision (benefit) from income taxes for continuing operations is summarized as follows (amounts in thousands):


	2015		2014
Federal: Current	$	(71)	$	(469)
Deferred		737		(2,513)
State: Current		2		5
Deferred		113		(507)
	$	781	$	(3,484)

Note that the percentage effect of an item on the statutory tax rate in a given year will fluctuate based upon the magnitude of the pre-tax profit or loss in that year. The difference between the tax rate for continuing operations on income or loss for financial statement purposes and the federal statutory tax rate was as follows:


	2015		2014
Statutory tax rate	34.0	%	(34.0)	%
Percentage depletion	(4.0)		(1.0)
Non-deductible expenses	2.0		0.4
Valuation allowance for tax assets	(4.9)		(0.4)
State income taxes, net of federal benefit	5.7		(4.1)
Expiring charitable contributions	2.6		—
Other	0.2		0.1
	35.6	%	(39.0)	%

For financial statement purposes, deferred tax assets and liabilities are recorded at a blend of the current statutory federal and states’ tax rates – 37.96%. The principal temporary differences and their related deferred taxes are as follows (amounts in thousands):


	2015		2014
Reserves for self-insured losses	$	605	$	655
Accrued reclamation		2,154		2,055
Unfunded supplemental profit sharing plan liability		379		444
Asset valuation reserves		317		432
Future state tax credits		789		789
Net state operating loss carryforwards		252		369
Federal AMT carryforward		481		268
Federal NOL carryforward		16		925
Other		100		197
Valuation allowance		(73)		(180)
Total deferred tax assets		5,020		5,954

Depreciation		841		1,146
Deferred development		563		245
Other		467		643
Total deferred tax liabilities		1,871		2,034
Net deferred tax asset	$	3,149	$	3,920

At January 2, 2016 the Company carries a valuation reserve of $193,000 ($73,000 tax effected) related to the carry forward of charitable contribution deductions arising in the current and prior years due to the uncertainty that the Company will be able to utilize these deductions prior to the expiration of their carry forward periods. For Federal purposes, Alternative Minimum Tax credits can be carried forward indefinitely. For State purposes, Net Operating Losses can be carried forward for periods ranging from 5 to 20 years for the states that the Company is required to file in. Of the $789,000 of recorded state tax credits, $760,000 relates to California Enterprise Zone hiring credits earned in prior years. These credits may be carried forward indefinitely.

The realization of the deferred tax assets is subject to our ability to generate sufficient taxable income during the periods in which the temporary differences become realizable. In evaluating whether a valuation allowance is required, we consider all available positive and negative evidence, including prior operating results, the nature and reason of any losses, our forecast of future taxable income and the dates on which any deferred tax assets are expected to expire. These assumptions require a significant amount of judgment, including estimates of future taxable income. The estimates are based on our best judgment at the time made based on current and projected circumstances and conditions.

As a result of the evaluation of the realizability of our deferred tax assets as of January 2, 2016, we concluded that it was more likely than not that all of our deferred tax assets would be realized to the extent not reserved for by a valuation allowance.

The Company accounts for uncertainty in income taxes recognized in its financial statements by applying GAAP’s recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The financial statement effects of a tax position are initially recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold should initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon effective settlement with a taxing authority. There was no gross amount of unrecognized tax benefits at either January 2, 2016 or January 3, 2015.

We file income tax returns in the United States Federal and various state jurisdictions. The Internal Revenue Service has completed examinations for periods through 2009. Federal tax years 2013 and on remain subject to examination. Various state income tax returns also remain subject to examination.