Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

The amounts of income tax expense reflected in operations is as follows:

	2023		2022
Current:
Federal	$	3,405,403	$	65,263
State		397,174		192,215
Foreign		544,251		664,766
Total:	$	4,346,828	$	922,244
Deferred:
Federal	$	554,763	$	(238,408	)
State		39,853		(56,157	)
Total:		594,616		(294,565	)
Total Income Tax Expense:	$	4,941,444	$	627,679

A summary of United States and foreign income before income taxes follows:

	2023		2022
United States	$	18,984,939	$	(142,095	)
Foreign		3,749,665		3,804,540
Total:	$	22,734,604	$	3,662,445

As discussed in Note 10 below, for segment reporting, direct import sales are included in the United States segment. However, the revenues are earned by our Hong Kong subsidiary and related income taxes are paid in Hong Kong whose rate approximates 16.5%. As such, income of the Asian subsidiary is included in the foreign income before taxes.

The following schedule reconciles the amounts of income taxes computed at the United States statutory rates to the actual amounts reported in operations:

	2023			2022
Federal income taxes at 21% statutory rate	$	4,774,267		$	716,122
State and local taxes, net of federal income tax effect		612,818			120,922
Stock options		(385,601	)		(128,169	)
Permanent items		183,139			—
Foreign tax rate difference		(243,179	)		(81,196	)
Provision for income taxes:	$	4,941,444		$	627,679

The following summarizes deferred income tax assets and liabilities:

	2023			2022
Deferred income tax liabilities:
Property, plant and equipment	$	2,328,345		$	2,004,200
Intangible assets		1,336,996			1,278,478
Other		609,817			251,655
Total deferred tax liabilities		4,275,158			3,534,333
Deferred income tax assets:
Net operating loss carryover		930,000			1,170,000
Stock compensation		1,964,332			1,687,357
Asset valuations		852,308			1,109,954
Other		559,174			431,737
Total deferred tax assets		4,305,814			4,399,048
Less: valuation allowance		(930,000	)		(1,170,000	)
Total deferred tax assets, net		3,375,814			3,229,048
Net deferred income tax liability:	$	899,344		$	305,285

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal examination for years before 2020, state and local examinations for year before 2019 and foreign examinations before 2020. The Company evaluated its tax positions for year which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as a result, concluded no adjustment was necessary.

The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2020 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2023.

Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance of its German subsidiary, the Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized. This valuation allowance, all of which is related to deferred tax assets resulting from net operating losses of the Company’s German subsidiary of approximately $.9 million, is subject to periodic review, and, if the allowance is reduced, the tax benefit will be recorded in future operations as a reduction of the Company's tax expense.