(8) INCOME TAXES

The components of the Partnership’s gross income tax expense for the years ended December 31, 2013, 2012 and 2011 were as follows (in thousands):

	2013			2012			2011
Currently payable	$	64		$	138		$	115
Deferred	(19		)	(12		)	(16		)
Gross income tax expense	$	45		$	126		$	99

The provision for income taxes equates to the 3.5% federal tax rate applied to gross income (net revenues less cost of goods sold) for the years ended December 31, 2013, 2012 and 2011.

The components of the net deferred income tax liability reported on the consolidated balance sheets as of December 31, 2013 and 2012 are as follows (in thousands):

	2013			2012
Deferred tax assets:
Intangible assets	$	115		$	115
Inventory	31			27
Gross deferred tax assets	146			142
Deferred income tax liabilities:
Land, orchards, and equipment	(1,164		)	(1,174		)
Other	(2		)	(7		)
Gross deferred tax liabilities	(1,166		)	(1,181		)
Net deferred income tax liabilities	$	(1,020	)	$	(1,039	)

Royal is subject to taxation as a C Corporation at the 34% federal tax rate and 8.34% blended state tax rate on the corporation’s taxable income (loss). As a result of the losses incurred by Royal for the years ended December 31, 2013 and 2012, the Partnership recorded a deferred tax assets of $1.3 million and $412,000, respectively, against which the Partnership recorded a valuation allowance equal to 100% of the deferred tax asset due to the uncertainty regarding future realization.