Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2015

12.	Income Taxes:

The components of the Company’s provision (benefit) for income taxes from continuing operations were as follows:

	As of December 31,
(in thousands)	2015			2014			2013
Current:
Federal	$	(149	)	$	4,859		$	6,207
State and local		(752	)		657			1,265
		(901	)		5,516			7,472
Deferred		(5,916	)		(2,566	)		(2,195	)
Income tax provision	$	(6,817	)	$	2,950		$	5,277

The components of the Company’s short and long-term deferred income taxes at December 31 are as follows:

(in thousands)	2015			2014
Deferred tax assets:
Inventory (excluding LIFO reserve)	$	2,986		$	2,881
Net operating loss and tax credit carryforwards		2,926			2,971
Allowance for doubtful accounts		500			519
Accrued expenses		7,311			7,642
Other		143			83
		13,866			14,096
Valuation reserve		(1,030	)		(1,381	)
Total deferred tax assets		12,836			12,715

Deferred tax liabilities:
LIFO reserve		(6,018	)		(6,049	)
Property and equipment		(20,601	)		(22,684	)
Intangibles		(11,329	)		(14,930	)
Other		(1	)		24
Total deferred tax liabilities		(37,949	)		(43,639	)
Deferred tax liabilities, net	$	(25,113	)	$	(30,924	)

The deferred tax liability decreased by $105 thousand related to the interest rate swap and by $3.1 million related to the partial impairment of the indefinite lived intangible asset, Tradename. Refer to footnote 5, Goodwill and Intangible Assets, for a detailed analysis of the partial impairment.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:

(in thousands)	2015			2014			2013
Balance as of January 1	$	58		$	75		$	112
Decreases related to prior year tax positions		(20	)		(17	)		(37	)
Increases related to current year tax positions		13			13			23
Decreases related to lapsing of statute of limitations		(13	)		(13	)		(23	)
Balance as of December 31	$	38		$	58		$	75

It is expected that the amount of unrecognized tax benefits will not materially change in the next twelve months. The tax years 2012 through 2014 remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in income tax expense. As of December 31, 2015 and December 31, 2014, the Company had approximately $2 thousand and $4 thousand of gross accrued interest related to uncertain tax positions, respectively.

The following table reconciles the U.S. federal statutory rate to the Company’s effective tax rate:

	2015			2014			2013
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal benefit		1.4	%		(1.6	%)		3.0	%
Goodwill impairment		(17.1	%)		(52.0	%)		-
Change in unrecognized tax benefits		0.1	%		(0.1	%)		(0.2	%)
All other, net		0.9	%		0.4	%		3.0	%
Effective income tax rate		20.3	%		(18.3	%)		40.8	%

Income taxes paid in 2015, 2014 and 2013 totaled $0.5 million, $4.7 million and $7.6 million, respectively. Some subsidiaries of the Company’s consolidated group file state tax returns on a separate company basis and have state net operating loss carryforwards expiring over the next seven to 20 years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than not to be realized.