Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

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

	2022			2021
Current:
Federal	$	65,263		$	4,980
State		192,215			153,937
Foreign		664,766			870,739
Total:	$	922,244		$	1,029,656
Deferred:
Federal	$	(238,408	)	$	401,196
State		(56,157	)		88,403
Total:		(294,565	)		489,599
Total Income Tax Expense:	$	627,679		$	1,519,255

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:

	2022			2021
United States	$	(142,095	)	$	9,721,756
Foreign		3,804,540			5,453,178
Total:	$	3,662,445		$	15,174,934

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:

	2022			2021
Federal income taxes at 21% statutory rate	$	716,122		$	2,915,698
State and local taxes, net of federal income tax effect		120,922			115,855
Permanent items		(128,169	)		(1,508,877	)
Foreign tax rate difference		(81,196	)		(3,421	)
Provision for income taxes:	$	627,679		$	1,519,255

Income tax expense in 2021 included a $1.4 million tax credit for stock-based compensation.

The following summarizes deferred income tax assets and liabilities:

	2022		2021
Deferred income tax liabilities:
Property, plant and equipment	$	2,004,200	$	1,916,218
		2,004,200		1,916,218
Deferred income tax assets:
Asset valuations		1,109,954		983,055
Other		588,961		333,883
		1,698,915		1,316,938
Net deferred income tax liability:	$	305,285	$	599,280

In 2022, 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, 2020 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2022.

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 of approximately $3.9 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.