Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

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

	2021		2020
Current:
Federal	$	4,980	$	880,149
State		153,937		159,909
Foreign		870,739		788,314
Total:	$	1,029,656	$	1,828,372
Deferred:
Federal	$	401,196	$	(59,801	)
State		88,403		(40,609	)
Total:		489,599		(100,410	)
Total Income Tax Expense:	$	1,519,255	$	1,727,962

The current state tax provision was comprised of taxes on income, the minimum capital tax and other franchise taxes related to the jurisdictions in which the Company's facilities are located.

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

	2021		2020
United States	$	9,721,756	$	4,524,432
Foreign		5,453,178		5,302,296
Total:	$	15,174,934	$	9,826,728

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:

	2021			2020
Federal income taxes at 21% statutory rate	$	2,915,698		$	1,864,097
State and local taxes, net of federal income tax effect		115,855			89,842
Permanent items		(1,508,877	)		(99,877	)
Foreign tax rate difference		(3,421	)		(126,100	)
Provision for income taxes:	$	1,519,255		$	1,727,962

The following summarizes deferred income tax assets and liabilities:

	2021		2020
Deferred income tax liabilities:
Plant, property and equipment	$	1,916,218	$	1,556,398
		1,916,218		1,556,398
Deferred income tax assets:
Asset valuations		983,055		992,101
Other		333,883		454,076
		1,316,938		1,446,177
Net deferred income tax liability:	$	599,280	$	110,221

On January 22, 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company considers any potential GILTI as an expense in the period the tax is incurred.

In 2021, the Company evaluated its tax positions for years 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 files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2018 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2021.

Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance of its German subsidiary and net loss carry forward expiration dates, 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, 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.