14.

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)	2019			2018		2017
Current:
Federal	$	1,747		$	9,188	$	7,695
International		107			-		-
State and local		22			1,797		666
		1,876			10,985		8,361
Deferred		(443	)		1,320		(10,974	)
Income tax provision (benefit)	$	1,433		$	12,305	$	(2,613	)

The components of the Company’s deferred income taxes at

December 31

are as follows:

(in thousands)	2019			2018
Deferred tax assets:
Inventory (excluding LIFO reserve)	$	1,353		$	1,622
Net operating loss and tax credit carryforwards		3,198			2,498
Allowance for doubtful accounts		513			504
Accrued expenses		5,486			6,087
Lease liabilities		6,718			-
Interest rate hedge		760			-
Other		237			232
Deferred tax assets before valuation allowance		18,265			10,943
Valuation allowance		(2,215	)		(2,055	)
Total deferred tax assets		16,050			8,888

Deferred tax liabilities:
LIFO reserve		(3,646	)		(3,870	)
Property and equipment		(13,250	)		(13,625	)
Lease right of use assets		(6,718	)		-
Intangibles		(4,698	)		(4,858	)
Total deferred tax liabilities		(28,312	)		(22,353	)
Deferred tax liabilities, net	$	(12,262	)	$	(13,465	)

The deferred tax liability decreased by

$760

thousand related to the fixed interest rate hedge, which is recorded in “Other Comprehensive Income” in the Consolidated Statements of Comprehensive Income.

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

(in thousands)	2019			2018			2017
Balance as of January 1	$	27		$	40		$	38
Change in tax due to tax law		-			(12	)		-
Increases related to current year tax positions		10			9			15
Decreases related to lapsing of statute of limitations		(9	)		(10	)		(13	)
Balance as of December 31	$	28		$	27		$	40

It is expected that the amount of unrecognized tax benefits will

not

materially change in the next

twelve

months. The tax years

2016

through

2018

remain open to examination by major taxing jurisdictions to which the Company is subject.

The Company recognized interest related to uncertain tax positions in the income tax provision.

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

	2019			2018			2017
U.S. federal statutory rate in effect		21.0	%		21.0	%		35.0	%
State and local taxes, net of federal benefit		3.7	%		4.6	%		3.6	%
Sec. 199 manufacturing deduction		-			-			(3.8	%)
Meals and entertainment		5.8	%		0.6	%		1.8	%
Tax credits		(4.2	%)		(0.6	%)		(1.3	%)
Change in valuation allowance		-			-			0.6	%
Change in U.S. federal statutory rate		-			-			(37.7	%)
Change in tax affect of SERP		-			-			(11.4	%)
All other, net		0.8	%		1.1	%		(2.8	%)
Effective income tax rate		27.1	%		26.7	%		(16.0	%)

December 22, 2017,

the President of the United States signed into law the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, among other things, lowered the U.S. corporate income tax rate from

35%

21%

effective

January 1, 2018.

Consequently, the Company decreased its net deferred tax liability as of

December 31, 2017

$6.2

million resulting in an income tax benefit to reflect the estimated impact of the Tax Act. Based on the Company’s predominantly U.S. based operational footprint, additional international and minimum tax provisions under the Tax Act, including the

one

-time transition tax for the transition from the worldwide system to the territorial system, were

not

applicable, or were

not

material to the Company.

2017,

the Company made an out-of-period adjustment to correct and record previously unrecognized deferred tax assets, and the associated tax benefit, related to a portion of the SERP that had previously been considered non-deductible under Section

162

(m) limitations in prior years. Due to the mandatory waiting period of

six

months prior to any SERP payment distribution, in

2017

the Company determined that the Section

162

(m) non-deductibility limitations did

not

apply. The adjustment, which had accumulated since the inception of the SERP in

2005,

resulted in an increase to after-tax income of

$1.9

million in

2017.

The Company determined that this adjustment was

not

material to its current or prior period consolidated financial statements.

Income taxes paid in

2019,

2018

and

2017

totaled

$0.5

million,

$11.3

million and

$9.4

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

two

years. A valuation allowance is recorded to reduce certain deferred tax assets to the amount that is more likely than

not

to be realized.