Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

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

	Year December 31, 2021			Year December 31, 2020
Income Before Provision for Income Taxes	$	7,362,942		$	7,475,241
Statutory rate		21	%		21	%
Tax at statutory rate		1,546,218			1,569,801
State taxes, net of federal benefit		560,080			336,654
Permanent differences		(397,016	)		18,715
Return to Provision Adjustments		362			(289,316	)
Provision for income taxes	$	1,709,644		$	1,635,854

Deferred tax assets (liabilities) consist of the following: 

	December 31, 2021			December 31, 2020
Inventories	$	190,588		$	179,171
Bad debts		5,549			5,009
Accrued liabilities		373,932			48,812
Prepaid expense		(210,244	)		(92,571	)
Depreciation and amortization		(3,638,314	)		(2,757,740	)
Research and development and other credit carryforwards		450,377			451,247
Right of use lease accounting		4,860			47,351
Directors stock option plan		185,201			161,212
Total deferred tax liability		(2,638,051	)		(1,957,509	)
Valuation allowance		(47,319	)		(47,319	)
Reserve for uncertain tax positions		(590,000	)		(425,000	)
Total reserves & allowances		(637,319	)		(472,319	)
Net deferred tax liability, net of reserves	$	(3,275,370	)	$	(2,429,828	)

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 and $47 thouand at December 31, 2021 and 2020, 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 $0.6 million and $0.4 million at December 31, 2021 and 2020, 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, 2021, 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
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	$	39,000