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, 2016

4. Income Taxes

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and it reported amount in the consolidated balance sheet at December 31, 2016 and 2015 are as follows:


	2016		2015
Non-current assets
Accruals and reserves	$	546	$	529
Deferred rent credit		283		—
Depreciation and amortization		(413)		(8)
Total deferred tax assets	$	416	$	521

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


	Year ended December 31,
	2016			2015			2014
Current:
Federal	$	2,515		$	2,779		$	2,693
State		55			61			79
Foreign		357			231			219
		2,927			3,071			2,991
Deferred:
Federal		102			(40)			6
State		3			(3)			1
		105			(43)			7
	$	3,032		$	3,028		$	2,998
Effective Tax Rate		33.9	%		34.2	%		34.2	%

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,
	2016		2015		2014
Statutory rate applied to pretax income	$	3,037	$	3,012	$	2,978
State income taxes, net of federal income tax benefit		36		39		52
Foreign income taxes under U.S. statutory rate		(64)		(44)		(56)
Other items, including the impact of the change in NJ state tax rate		23		21		24
Income tax expense	$	3,032	$	3,028	$	2,998

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, 2016, the Company’s 2013 through 2015 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 2013 through 2015. 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,
	2016		2015		2014
United States	$	7,514	$	7,937	$	7,903
Foreign		1,419		921		855
	$	8,933	$	8,858	$	8,758