Note D - Income Taxes

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE D – INCOME TAXES

The provision for income taxes consists of the following:

	Years ended December 31,
Current	2020		2019
Federal	$	1,091,148	$	1,135,209
State		45		178
Total current provision for income taxes		1,091,193		1,135,387

Deferred
Federal		(235,171	)		133,272
State		---			---
Total deferred (benefit from) provision for income taxes		(235,171	)		133,272
Total provision for income taxes	$	856,022		$	1,268,659

The following is a reconciliation of the Company's effective income tax rate to the Federal statutory rate (dollar amounts have been rounded to the nearest thousand):

	Years ended December 31,
	2020						2019
	($)			Tax rate			($)			Tax rate
Income taxes at statutory federal income tax rate	$	874,000			21.0	%	$	1,266,000			21.0	%
Nondeductible expenses		---			---			1,000			---
Research & development credits		(10,000	)		(0.2	)		(8,000	)		(0.1	)
Non-taxable dividends		(3,000	)		(0.1	)		(2,000	)		---
Other, net		(5,000	)		(0.1	)		12,000			0.2
Provision for income taxes	$	856,000			20.6	%	$	1,269,000			21.1	%

The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:

	December 31,
	2020			2019
Deferred tax assets
Allowance for doubtful accounts	$	2,944		$	4,447
Inventories		7,350			7,350
Accounts payable		6,678			14,991
Accrued expenses		284,145			235,633
Total deferred tax assets		301,117			262,421
Deferred tax liabilities
Accounts receivable		(294,360	)		(445,113	)
Prepaid expenses		(33,829	)		(42,319	)
Depreciation on property, plant and equipment		(60,724	)		(73,384	)
Unrealized gain on marketable securities		(63,888	)		(88,460	)
Total deferred tax liabilities		(452,801	)		(649,276	)
Net deferred tax liability	$	(151,684	)	$	(386,855	)