Note 7 - Income Taxes

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. Income Taxes

The Company recorded its interim provision for income taxes by applying the estimated annual effective tax rate to the year-to-date pre-tax loss and adjusting for discrete tax items recorded in the period. Deferred income taxes result from temporary differences between the reporting of amounts for financial statement purposes and income tax purposes. These differences relate primarily to different methods used for income tax reporting purposes, including for depreciation and amortization, warranty and vacation accruals, and deductions related to allowances for doubtful accounts receivable and inventory reserves. The provision for income taxes (benefits) included current federal and state income tax expense (benefit), as well as deferred federal and state income tax expense.

The effective tax rate for the

three

months ended

March 31, 2019

was a benefit of

18.4%,

compared to a benefit of

13.5%

for the

three

months ended

March 31, 2018. 

The primary driver of the change in the Company’s effective tax rate is attributable to an increase in the tax benefit related to tax credits proportionate to pre-tax book loss as compared to the prior year's reporting period.  The Company recorded an income tax benefit of

$103,000

and

$20,000

for the 

three

 months ended

March 31, 2019 

and

2018,

respectively.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority is more-likely -than-

not

to sustain the position following an audit. For tax positions meeting the more-likely-than-

not

threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than

50%

likelihood of being realized upon ultimate settlement with the relevant tax authority. As of

March 31, 2019

the Company has

no

unrecognized tax benefits.

The Company is

not

currently under examination in any jurisdiction. In the event of any future tax assessments, the Company has elected to record the income taxes and any related interest and penalties as income tax expense on the statement of operations.  The federal Tax Cut and Jobs Act of

2017

(the “Tax Reform Act”) was enacted

December 22, 2017. 

Effective

January 1, 2018,

the Tax Reform Act reduced statutory corporate income tax rates from

35%

to

21%

in addition to other tax changes.