Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12.

INCOME TAXES

 

A reconciliation of the provision of income taxes to the statutory federal income tax rate is as follows:

	Year			Year
	December 31, 2019			December 31, 2018
Income Before Provision for Income Taxes	$	9,419,490		$	5,281,730
Statutory rate		21	%		21	%
Tax at statutory rate		1,978,092			1,109,163
State taxes, net of federal benefit		551,179			79,165
Permanent differences		23,889			196,142
Return to Provision Adjustments and Other		(113,533	)		283,550
Provision for income taxes	$	2,439,627		$	1,668,020

Deferred tax assets (liabilities) consist of the following: 

	December 31, 2019			December 31, 2018
Inventories	$	164,768		$	145,844
Bad debts		4,659			8,773
Accrued liabilities		279,508			281,475
Prepaid expense		(116,524	)		(95,371	)
Depreciation and amortization		(2,798,040	)		(2,928,232	)
Research and development and other credit carryforwards		556,387			1,266,043
Right of use lease accounting		(19,600	)		-
Directors stock option plan		163,427			62,134
Total deferred tax liability		(1,765,415	)		(1,259,334	)
Valuation allowance		(47,319	)		(47,319	)
Reserve for uncertain tax positions		(395,000	)		(395,000	)
Total reserves & allowances		(442,319	)		(442,319	)
Net deferred tax liability, net of reserves	$	(2,207,734	)	$	(1,701,653	)

Valuation Allowance

The Company has a valuation allowance for deferred tax assets based upon certain credits that

may

not

be fully utilized in the future. The Company believes the valuation allowance of

$47

thousand at

December 31, 2019

and

2018,

respectively, is adequate.

Reserve for Uncertain Tax Positions

The Company has a reserve of unrecognized tax benefits related to exposures in accordance with ASC

740.

The Company believes the valuation allowance of

$0.4

million at

December 31, 2019

and

2018,

respectively, is adequate. Due to the uncertainties involved with this significant estimate, it is reasonably possible that the Company’s estimate

may

change in the near term.
 

Tax Credits

and Net Operating losses

:

At

December 31, 2019,

the Company has state net operating losses (NOLs) and research and development (R&D) and other credit carryforwards for tax purposes which expire as follows: 

Tax Year Expires	State NOLs		R& D & Other Credits
2020		-		3,000
2021		-		3,000
2022		-		3,000
2023		-		3,000
2024		-		3,000
2025		-		3,000
2026		-		72,216
2027		-		152,732
2028		-		68,676
2029		191,519		31,081
2030		414,231		44,712
2031		641,229		59,085
2032		-		71,062
2033		532,837		73,198
2034		285,607		76,429
2035		-		73,315
2036 and beyond		-		-
	$	2,065,423	$	740,506