Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2020

13.

INCOME TAXES

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

	Year			Year
	December 31, 2020			December 31, 2019

Income Before Provision for Income Taxes	$	7,475,241		$	9,419,490
Statutory rate		21	%		21	%
Tax at statutory rate		1,569,801			1,978,092
State taxes, net of federal benefit		336,654			551,179
Permanent differences		18,715			23,889
Return to Provision Adjustments		(289,316	)		(113,533	)
Provision for income taxes	$	1,635,854		$	2,439,627

Deferred tax assets (liabilities) consist of the following:

	December 31, 2020			December 31, 2019

Inventories	$	179,171		$	164,768
Bad debts		5,009			4,659
Accrued liabilities		48,812			279,508
Prepaid expense		(92,571	)		(116,524	)
Depreciation and amortization		(2,757,740	)		(2,798,040	)
Research and development and other credit carryforwards		451,247			556,387
Right of use lease accounting		47,351			(19,600	)
Directors stock option plan		161,212			163,427
Total deferred tax liability		(1,957,509	)		(1,765,415	)
Valuation allowance		(47,319	)		(47,319	)
Reserve for uncertain tax positions		(425,000	)		(395,000	)
Total reserves & allowances		(472,319	)		(442,319	)
Net deferred tax liability, net of reserves	$	(2,429,828	)	$	(2,207,734	)

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, 2020

and

2019,

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, 2020

and

2019,

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:

December 31, 2020,

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
2021		-		3,000
2022		-		3,000
2023		-		3,000
2024		-		3,000
2025		-		3,000
2026		-		3,000
2027		-		3,000
2028		-		3,000
2029		191,519		3,000
2030		414,231		3,000
2031		641,229		3,000
2032		-		3,000
2033		532,837		3,000
2034		285,607		3,000
2035		-		-
2036		-
2037 and beyond		-		-
	$	2,065,423	$	42,000

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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