Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2022

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, 2022			December 31, 2021
Income Before Provision for Income Taxes	$	7,732,194		$	7,362,942
Statutory rate		21	%		21	%
Tax at statutory rate		1,623,761			1,546,218
State taxes, net of federal benefit		20,438			560,080
Release of FIN 48 reserve		(414,000	)		-
Permanent differences		(17,334	)		(397,016	)
Return to provision adjustments		(22,681	)		362
Other		(19,393	)		-
Provision for income taxes	$	1,170,791		$	1,709,644

Deferred tax assets (liabilities) consist of the following: 

	December 31, 2022			December 31, 2021
Inventories	$	221,441		$	190,588
Bad debts		5,757			5,549
Accrued liabilities		677,728			373,932
Prepaid expense		(136,419	)		(210,244	)
Depreciation and amortization		(3,111,224	)		(3,638,314	)
Capitalized Costs		629,085			-
Research and development and other credit carryforwards		443,689			450,377
Right of use lease accounting		(80,376	)		4,860
Directors stock option plan		180,761			185,201
Total deferred tax liability		(1,169,558	)		(2,638,051	)
Valuation allowance		(39,000	)		(47,319	)
Reserve for uncertain tax positions		(176,000	)		(590,000	)
Total reserves & allowances		(215,000	)		(637,319	)
Net deferred tax liability, net of reserves	$	(1,384,558	)	$	(3,275,370	)

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 $29 thousand at December 31, 2022 and $47 thousand at December 31, 2021, 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 $0.2 million at December 31, 2022 and $0.6 million at December 31, 2021, 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, 2022, 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
2023	$	-	$	6,000
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		-		3,000
2034		532,837		3,000
2035		285,607		-
2036		-		-
2037 and beyond		-		-
	$	2,065,423	$	39,000