Note 6 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

6. INCOME TAXES

The income tax provision from operations consists of the following:

Year ended December 31, (in thousands)	2021			2020
Current	$	2,951		$	1,925
Deferred		(227	)		543
Total	$	2,724		$	2,468

The following is a reconciliation of estimated income taxes at the statutory rate from operations to estimated tax expense (benefit) as reported:

Year ended December 31,	2021			2020
Statutory rate		21	%		21	%
State and local taxes, net of federal benefit		5.8			4.7
Equity compensation		0.3			0.3
Research and development credit		(2.6	)		(2.5	)
Foreign tax credit		(1.3	)		(2.7	)
GILTI income inclusion		-			1.8
Other		-			0.6
Effective rate		23.2	%		23.2	%

Net deferred tax assets (liabilities) consist of the following at December 31:

(in thousands)	2021			2020
Deferred tax (liabilities) assets:
Unrealized loss on investments	$	896		$	788
Foreign Tax Credit		259			124
Fixed assets		(1,335	)		(1,347	)
Other		148			134
Total deferred tax liability		(32	)		(301	)
Less valuation allowance		(517	)		(517	)
Net deferred tax liability	$	(549	)	$	(818	)

We had net deferred tax liabilities of approximately $0.5 million and $0.8 million at December 31, 2021 and December 31, 2020, respectively. The gross deferred tax asset/liability has been offset by a valuation allowance of $0.5 million in 2021 and 2020, because the Company believes that it is more likely than not that the amount will not be realized. We have maintained a valuation allowance on deferred tax assets resulting from unrealized capital losses as we are not able to conclude that is it more likely than not that these will be realized due to the unpredictability of future capital gains. No deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.

We have recognized tax benefits from all tax positions we have taken, and there has been no adjustment to any carry forwards (net operating loss or research and development credits) in the past two years. There were no unrecognized tax benefits as of December 31, 2021 and 2020. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for returns filed more than three years ago.