INCOME TAXES

The provision (benefit) for income taxes on income (loss) from continuing operations consists of the following:



	2014			2013			2012
Current
Federal	$	979		$	282		$	154
State	(190		)	178			88
Total current	789			460			242

Deferred
Federal	243			(955		)	(592		)
State	21			(82		)	(51		)
Total deferred	264			(1,037		)	(643		)
Income tax provision (benefit)	$	1,053		$	(577	)	$	(401	)

Differences between the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate to income (loss) from continuing operations before taxes are summarized as follows:



	2014			2013			2012
Federal statutory rate	35		%	35		%	35		%
Statutory rate applied to income (loss) from continuing operations before taxes	$	604		$	1,743		$	(369	)
Plus state income taxes, net of federal tax effect	(169		)	96			24
Total statutory provision (benefit)	435			1,839			(345		)
Increase (decrease) attributable to:
Nondeductible meals and entertainment	143			112			88
Domestic production activities deduction	112			(208		)	—
Federal tax credits	(483		)	(1,612		)	—
Reserve for uncertain tax positions	109			286			—
Goodwill	(124		)	283			—
Change in valuation allowance	569			(1,190		)	—
Non-taxable insurance proceeds	—			(71		)	—
Stock-based compensation	117			—			14
True-up to tax return	102			14			(75		)
Other items	73			(30		)	(83		)
Total tax provision (benefit)	$	1,053		$	(577	)	$	(401	)

In 2014, the Company increased valuation allowances by $569 related to state income tax loss carryforwards and credit carryforwards. This was primarily the result of actual 2014 pretax earnings being significantly less that the 2014 forecasted earnings used in the 2013 analysis, a change in California apportionment rules that limit the utilization of net operating loss and credit carryforwards in future years and a projected tax loss in 2014 that resulted in the need to record a valuation allowance against that loss in separate company reporting states.

During 2013, the Company reversed $1,190 of previously established reserves related to state income tax loss carryforwards and state income tax credit carryforwards. The reversal of the reserves was based on a number of factors including current and future earnings assumptions by taxing jurisdiction. Additionally, 2013 included certain tax credits of approximately $520 related to 2009 - 2011 determined to be available for utilization and $304 of 2012 research and development tax credits that could not be recognized until the extension of the credit was approved by Congress in 2013.

The Company’s 2012 effective income tax benefit rate varied from statutory rates primarily as a result of adjustments to estimates used in the 2011 estimated tax calculations versus amounts used in the subsequent tax return filing for the 2011 period; net of the effects of permanent differences on the lower level of pre-tax earnings in the 2012 tax calculations.

Income tax payments, net of income tax refunds received for continuing and discontinued operations were $345 in 2014, $58 in 2013 and $1,318 in 2012.

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



	2014			2013
Deferred tax assets:
Inventories	$	2,842		$	2,226
Retirement benefits	3,215			3,408
State net operating losses	3,417			2,936
Federal net operating losses	3,503			—
State tax credit carryforwards	1,740			1,740
Federal tax credit carryforwards	2,472			—
Allowances for bad debts, claims and discounts	3,175			2,527
Other	4,776			5,279
Total deferred tax assets	25,140			18,116
Valuation allowance	(4,317		)	(3,748		)
Net deferred tax assets	20,823			14,368

Deferred tax liabilities:
Property, plant and equipment	17,477			11,818
Total deferred tax liabilities	17,477			11,818

Net deferred tax asset	$	3,346		$	2,550



Balance sheet classification:	2014		2013
Current deferred tax assets	$	12,722	$	6,622
Non-current deferred tax liabilities	9,376		4,072
Net deferred tax asset	$	3,346	$	2,550

At December 27, 2014, $3,503 of deferred tax assets related to approximately $10,010 of federal net operating loss carryforwards and $3,417 of deferred tax assets related to approximately $77,405 of state net operating loss carryforwards. In addition, $2,472 of federal tax credit carryforwards and $1,740 of state tax credit carryforwards were available to the Company. The federal net operating loss carryforwards and the federal tax credit carryforwards will expire in 20 years. The state net operating loss carryforwards and the state tax credit carryforwards will expire within 10 years. A valuation allowance of $4,317 is recorded to reflect the estimated amount of deferred tax assets that may not be realized during the carryforward periods. At December 27, 2014, the Company is in a net deferred tax asset position of $3,346. The Company performed an analysis related to the net deferred tax asset and believes that the net tax asset is recoverable in future periods.

Tax Uncertainties

The Company accounts for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $400 and $291 at December 27, 2014 and December 28, 2013, respectively. Such benefits, if recognized, would affect the Company's effective tax rate. There were no significant interest or penalties accrued as of December 27, 2014 and December 28, 2013.

The following is a summary of the change in the Company's unrecognized tax benefits:



	2014		2013			2012
Balance at beginning of year	$	291	$	5		$	16
Additions based on tax positions taken during a prior period	—		250			—
Additions based on tax positions taken during a current period	109		41			—
Reductions related to settlement of tax matters	—		—			—
Reductions related to a lapse of applicable statute of limitations	—		(5		)	(11		)
Balance at end of year	$	400	$	291		$	5

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2010 remain open to examination for U.S. federal income taxes. The majority of state jurisdictions remain open for tax years subsequent to 2010. A few state jurisdictions remain open to examination for tax years subsequent to 2009.