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corresp

December 28, 2005

Securities and Exchange Commission

Washington, D.C. 20549-7010

Subject: Response to Correspondence Dated November 14, 2005

                    Meadow Valley Corporation

                    Form 10-K for the fiscal year ended December 31, 2004

                    Filed March 31, 2005

                    File No. 0-25428

Dear Ms. Do:

     In response to your letter to us dated November 14, 2005 and based on our teleconference held
on December 12, 2005, we are offering additional responses to the Staff’s comments using the same
paragraph numbers contained in the Staff’s letter to us dated November 14, 2005. Our addendums to
our prior responses are as follows:

Form 10-K for the year ended December 31, 2004

12. Income Taxes, page 37

1. Resolved

2. Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes” Paragraph No.
21 reads as follows: “Future realization of the tax benefit of an existing deductible temporary
difference or carryforward ultimately depends on the existence of sufficient taxable income of the
appropriate character (for example, ordinary income or capital gain) within the carryback,
carryforward period available under the tax law...”

     The four sources of taxable income discussed under paragraph 21 are as follows:

    a.

    Future reversals of existing taxable temporary differences

    b.

    Future taxable income exclusive of reversing temporary differences and carryforwards

    c.

    Taxable income in prior carryback year(s) if carryback is permitted under the tax law

    d.

    Tax-planning strategies (paragraph 22) that would, if necessary, be implemented to,
for example

    1.

    Accelerate taxable amounts to utilize expiring carryforwards

    2.

    Change the character of taxable or deductible amounts from ordinary
income or loss to capital gain or loss

    3.

    Switch from tax-exempt to taxable investments.

P.O. Box 60726 Phoenix, Arizona 85082-0726

Telephone: 602-437-5400 Fax: 602-437-1681

Securities and Exchange Commission

December 28, 2005

Page 2

     We believe we evaluated all positive and negative evidence when we determined the need for a
valuation allowance. When evaluating the first source of taxable income, pursuant to Paragraph 21a
of SFAS 109 reversing future taxable temporary differences, we agree that this single source would
be able to reverse the entire deferred tax asset. If we were in a vacuum we would not need an
allowance. However, as prudent and responsible managers and pursuant to paragraphs 23 and 24 of
FSAS 109 we are required to look at all the other relevant information available to us at the time,
which included continuing losses from operations.

     When evaluating the second source of taxable income, future taxable income exclusive of
reversing temporary differences, we included in our outlook the fact that we were in the process of
spinning off a segment of our business, the construction materials segment (Ready Mix, Inc.). This
would leave the parent company, Meadow Valley Corporation, a holding company, and Meadow Valley
Contractors, Inc., an operating company, as the only two entities consolidated for tax purposes.
Looking back over the past five years we would have had significant tax losses if we would not have
had the construction materials segment. The primary reason for the losses in the construction
service segment over the past two years was primarily due to a project in Utah, which we refer to
as the Gooseberry project. This is discussed in our 2003 and 2004 Form 10-K “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” on pages 13 and 14 of
each form 10-K. As discussed, we had recognized approximately $2.5 million and $5.2 million in
losses during 2003 and 2004, respectively from this project. We believed at the end of each year
that we had recognized all future losses anticipated on the project. However, we could offer no
assurance that there would not be any additional future losses. Although we believed that the
construction service segment would turn the corner back to profitability during 2005 we could not,
as prudent managers, ignore the history we had most recently experienced with Gooseberry. Based on
this operating loss history and spin off information, we could have created an allowance for the
entire portion of the NOL as of December 31, 2005.

     The third source of taxable income or utilization of NOL would be to carry the NOL backwards
to previous years which had taxable income and utilize the NOL. This source had already been
utilized in previous years and therefore was no longer applicable.

     The last source of taxable income would then be tax planning strategies. We reviewed several
tax planning strategies, including the possibility of accelerating taxable amounts associated with
our construction work in progress, but determined that it may not withstand the test of audit
review and therefore did not want to implement such a strategy.

     After full consideration of all positive and negative evidence we felt that an allowance
against the deferred tax asset was required. More importantly, we believe the value of the net NOL
carryforward asset is accurately represented as of December 31, 2004 and 2003.

     This is based upon our overall review of SFAS 109 and its requirement pursuant to paragraph 25
that states “An enterprise must use judgment in considering the relative impact of negative and
positive evidence.” Although an objective verification is difficult in determining the results
from future operations, we believe that we considered both the potential reversal of deferred
liabilities, as well as our continuing loss from operations in evaluating the worth of our deferred
tax asset. This included the consideration of the likelihood of future losses on Gooseberry and
our prior operating history in regards to this project.

3. As a result of our teleconference, my understanding of the information being requested became
clearer and based upon a further detailed analysis of our federal and state income taxes we have
determined that our 2004 federal and state returns were prepared in error by our outside
accountants. This, in turn, overstated our tax loss for the year ended December 31, 2004. The net
operating loss carryforward was overstated by approximately $1,450,000, or $520,000 of deferred tax
asset. The amended federal tax return, for the year ended December 31, 2004 will have a net
operating loss carry forward of approximately $4,686,550, or $1,690,000 of deferred tax asset,
before a valuation allowance. Below is a draft of our

Securities and Exchange Commission

December 28, 2005

Page 3

proposed disclosure for inclusion in our form 10-K for the year ended December 31, 2005, for your
review. This is based upon an amendment of our prior footnote 12, as follows:

12. Income Taxes:

     The provisions for income tax benefit (expense) from operations consist of the following:

    For the years ended December 31,

    2005

    2004

    2003

    Current

    $

    $
    (5,919
    )

    $
    54,068

    Deferred

    (284,885
    )

    (95,711
    )

    $

    $
    (290,804
    )

    $
    (41,643
    )

     The Company’s deferred tax asset (liability) consists of the following:

    December 31,

    2005

    2004 *

    Deferred tax asset:

    Allowance for bad debt and other

    $

    $
    355,564

    Inventory allowance

    91,095

    NOL carryforward

    1,687,000

    Less: NOL valuation allowance

    (536,032
    )

    1,597,627

    Deferred Tax liability:

    Depreciation and other

    (3,243,268
    )

    Net deferred tax liability

    $

    $
    (1,645,641
    )

     * - As restated, to report net operating loss carryforward and valuation allowance at the
gross amounts, which we previously reported at their net amounts.

     At December 31, 2005, the Company has available federal and state operating loss carryforwards
of approximately $XX,XXX and $XX,XXX. At December 31, 2004, the Company had available federal and
state operating loss carryforwards of approximately $4,686,550 and $3,550,000. The federal and
state operating loss carryforwards will expire through the years 2024 and 2009, respectively and
are disclosed by year in the tables below.

     Net operating loss carryforward expiration schedule as of
December 31, 2005:

    Federal

    State

    Tax Year

    Operating Loss

    Tax Year

    Operating Loss

    Expiring

    Carryforward

    Expiring

    Carryforward

    2024

    $

    2009

    $

    2023

    2008

    2022

    2007

    2021

    2006

    2005

    Total

    $

    $

Securities and Exchange Commission

December 28, 2005

Page 4

     Net operating loss carryforward expiration schedule as of December 31, 2004:

    Federal

    State

    Tax Year

    Operating Loss

    Tax Year

    Operating Loss

    Expiring

    Carryforward

    Expiring

    Carryforward

    2024

    $
    1,924,750

    2009

    $
    410,000

    2023

    —

    2008

    1,016,000

    2021

    26,100

    2007

    9,000

    2020

    2,735,700

    2006

    1,185,000

    2005

    930,000

    Total

    $
    4,686,550

    $
    3,550,000

     For the years ended December 31, 2005, 2004 and 2003, the effective tax rate differs from the
federal statutory rate primarily due to state income taxes and permanent differences, as follows:

    For the Years Ended December 31,

    2005

    2004

    2003

    Statutory rate applied to income
before income taxes

    $

    $
    303,000

    $
    55,000

    State taxes

    18,000

    5,000

    Increase (decrease) in income taxes
resulting from:

    Valuation allowance

    (34,000
    )

    369,000

    Non-Deductible items

    12,000

    12,000

    Change in combined tax rate

    (27,000
    )

    —

    True-up prior year filed tax returns

    44,000

    (9,000
    )

    True-up deferred tax asset/
liabilities

    (25,000
    )

    (390,000
    )

    $

    $
    291,000

    $
    42,000

     Further we will provide the valuation allowance schedule pursuant to schedule II of Rule 5-04
of Regulation S-X with the next audited financial statement. We anticipate that schedule, in
regards to the deferred tax asset valuation allowance and adjusted from the table included in the
letter dated October 6, 2005, to appear as follows:

Schedule of Valuation and Qualifying Accounts

    Balance

    Charged

    Balance

    at beginning

    to expense

    at end

    Description

    of year

    account

    Deductions

    of year

    Year ended December 31, 2003

    Deferred tax asset valuation allowance

    $
    201,000

    $
    369,000

    $
    —

    $
    570,000

    Year ended December 31, 2004

    Deferred tax asset valuation allowance

    570,000

    34,000

    536,000

    Year ended December 31, 2005

    Deferred tax asset valuation allowance

    $
    536,000

    $
    —

    $(xxx,xxx)

    $xxx,xxx

Securities and Exchange Commission

December 28, 2005

Page 5

4. Resolved

     We trust that the responses provided herein satisfactorily address your comments. We
acknowledge that the company is: a) responsible for the adequacy and accuracy of the disclosures in
our filings; b) that our responses to the Staff comments or changes in our disclosures do not
foreclose the Commission from taking any action with respect to the filing, and; c) that the
company may not assert Staff comments as a defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

Sincerely,

MEADOW VALLEY CORPORATION

/s/ Clint Tryon

Clint L. Tryon

Principal Accounting Officer