Climb Global Solutions Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Dec. 31, 2015

4. Income Taxes

Deferred tax attributes resulting from differences between financial and accounting amounts and tax basis of assets and liabilities at December 31, 2015 and 2014 are as follows:

	2015		2014
Current assets
Accruals and reserves	$	260	$	245

Net current deferred tax assets	$	260	$	245

	2015			2014
Non-current assets
Accruals and reserves	$	269		$	206
Depreciation and amortization	(8		)	(24		)
Net non-current deferred tax assets	$	261		$	182
Total deferred tax assets	$	521		$	427

The provision (benefit) for income taxes is as follows:

	Year ended December 31,
	2015			2014			2013
Current:
Federal	$	2,779		$	2,693		$	2,873
State	61			79			15
Foreign	231			219			49

	3,071			2,991			2,937
Deferred:
Federal	(40		)	6			13
State	(3		)	1			69

	(43		)	7			82

	$	3,028		$	2,998		$	3,019

Effective Tax Rate	34.2		%	34.2		%	32.1		%

The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes are as follows:

	Year ended December 31,
	2015			2014			2013

Statutory rate applied to pretax income	$	3,012		$	2,978		$	3,200
State income taxes, net of federal income tax benefit	39			52			91
Foreign income taxes under U.S. statutory rate	(44		)	(56		)	(20		)
Other items, including the impact of the change in NJ state tax rate	21			24			(252		)

Income tax expense	$	3,028		$	2,998		$	3,019

The Company receives a tax deduction from the income realized by employees on the exercise of certain non-qualified stock options and restricted stock awards for which the tax effect of the difference between the book and tax deduction is recognized as a component of stockholders’ equity.

The Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return and its state tax return in New Jersey and its Canadian tax return as major tax jurisdictions. As of December 31, 2015, the Company’s 2012 through 2014 Federal tax returns remain open for examination, as the Company recently concluded an Internal Revenue Service examination for the 2011 and 2012 tax years. This examination resulted in no change to the previously filed Federal corporate tax returns. The Company’s New Jersey and Canadian tax returns are open for examination for the years 2012 through 2014. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter

For financial reporting purposes, income before income taxes includes the following components:

	Year ended December 31
	2015		2014		2013
United States	7,937		$	7,903	$	8,832
Foreign	921		855		580

	$	8,858	$	8,758	$	9,412