ELECTRO SENSORS INC - 10-K filing on 2014-03-21

Income Taxes

12 Months Ended

Dec. 31, 2013

Note 10. Income Taxes

The components of the income tax provision for the years ended December 31, 2013 and 2012 are as follows:



	2013		2012

Current:
Federal	$	302	$	513
State		1		5
Deferred:
Federal		(47)		31
State		(24)		7
Total Federal and State Income Taxes	$	232	$	556

The provision for income taxes for the years ended December 31, 2013 and 2012 differs from the amount obtained by applying the U.S. federal income tax rate to pretax income due to the following:



	2013		2012

Computed “Expected” Federal Tax Expense	$	319	$	560
Increase (Decrease) in Taxes Resulting From:
State Income Taxes, net of Federal Benefit		9		26
Credits		(70)		(16)
Domestic Production Activities Deduction		(18)		(20)
Permanent Differences		3		6
Rate Change for Deferred Taxes		(11)		0
Total Federal and State Income Taxes	$	232	$	556

The components of the net deferred tax liability consist of:



	2013		2012

Deferred Tax Assets:
Vacation Accrual	$	27	$	26
Allowance for Doubtful Accounts		3		4
Stock Compensation		57		0
State Carryforward R&D Credit		12		0
Total Deferred Tax Assets	$	99	$	30

Deferred Tax Liabilities:
Prepaid Expenses	$	30	$	23
Depreciation		91		100
Net Unrealized Gain on Investments		1,000		1,362
Total Deferred Tax Liabilities	$	1,121	$	1,485

Net Deferred Tax Liability	$	(1,022)	$	(1,455)

The Company is subject to the following material taxing jurisdictions: U.S. and Minnesota. The tax years that remain open to examination by the Internal Revenue Service are 2010 through 2013. The tax years that remain open to examination by the Minnesota Department of Revenue are 2010 through 2013. We have no accrued interest or penalties related to uncertain tax positions as of January 1, 2013 or December 31, 2013 and uncertain tax positions are not significant..