3.INCOME TAXES

A reconciliation between income taxes computed at the statutory federal income tax rate and the effective tax rate for the years ended December 31, 2015 and 2014 is as follows:


	2015		2014
Federal tax expense at statutory rates	$	1,569,667	$	1,394,793
Nondeductible lobbying expense		25,536		29,518
State expense, net of federal impact		312,950		280,263
Stock option expense		(910)		(364)
Other		(17,594)		(13,033)
	$	1,889,649	$	1,691,177

On December 31, 2015, the Company adopted ASU 2015-17 - Balance Sheet Classification of Deferred Taxes and all deferred taxes were prospectively recorded as non-current liabilities.

Income tax expense for the years ended December 31, 2015 and 2014 consists of the following:


	2015		2014
Current
Federal	$	932,257	$	1,070,360
State		321,992		307,117
		1,254,249		1,377,477
Deferred, primarily Federal		635,400		313,700
	$	1,889,649	$	1,691,177

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows:


	2015		2014
Deferred tax liabilities
Vacation accrual	$	79,600	$	73,300
Player rewards program accrual		191,600		202,100
Stock options and stock appreciation rights		256,300		404,300
Tax depreciation greater than book depreciation		(2,408,400)		(2,254,200)
Deferred gain on sale of land		(453,800)		(104,000)
Other		(7,200)		(28,000)
Net long-term deferred tax (liabilities) assets	$	(2,341,900)	$	(1,706,500)

The Company is subject to U.S. and Minnesota taxation. The Company is no longer subject to U.S. federal, state, or local examinations by tax authorities for years before 2012.