| Income Tax Disclosure [Text Block] |
12. INCOME TAXES
Income tax expense for 2023 was $3,869,355 which was comprised of $4,817,023 of current income tax expense and $947,668 of deferred income tax benefit, resulting in an effective tax rate of 22.5%. Income tax expense for 2022 was $1,170,791 which was comprised of $2,629,560 of current income tax expense and $1,458,769 of deferred income tax benefit, resulting in an effective tax rate of 15.1%.
A reconciliation of the provision of income taxes to the statutory federal income tax rate is as follows:
| | | Year | | | Year | |
| | | December 31, | | | December 31, | |
| | | 2023 | | | 2022 | |
| | | | | | | | | |
| Income Before Provision for Income Taxes | | $ | 17,164,148 | | | $ | 7,732,194 | |
| Statutory rate | | | 21 | % | | | 21 | % |
| Tax at statutory rate | | | 3,604,471 | | | | 1,623,761 | |
| State taxes, net of federal benefit | | | 302,484 | | | | 20,438 | |
| Release of FIN 48 reserve | | | (121,000 | ) | | | (414,000 | ) |
| Deferred Adjustments | | | 125,935 | | | | - | |
| Permanent differences | | | (299,103 | ) | | | (17,334 | ) |
| Return to provision adjustments | | | 262,552 | | | | (22,681 | ) |
| Other | | | (5,984 | ) | | | (19,393 | ) |
| Provision for income taxes | | $ | 3,869,355 | | | $ | 1,170,791 | |
Deferred tax assets (liabilities) consist of the following:
| | | December 31, | | | December 31, | |
| | | 2023 | | | 2022 | |
| | | | | | | | | |
| Inventories | | $ | 176,022 | | | $ | 221,441 | |
| Bad debts | | | 23,197 | | | | 5,757 | |
| Accrued liabilities | | | 527,320 | | | | 677,728 | |
| Prepaid expense | | | (103,037 | ) | | | (136,419 | ) |
| Depreciation and amortization | | | (2,464,503 | ) | | | (3,111,224 | ) |
| Capitalized Costs | | | 496,897 | | | | 629,085 | |
| Research and development and other credit carryforwards | | | 1,067,816 | | | | 443,689 | |
| Right of use lease accounting | | | (149,876 | ) | | | (80,376 | ) |
| Directors stock option plan | | | 203,914 | | | | 180,761 | |
| Total deferred tax liability | | | (222,250 | ) | | | (1,169,558 | ) |
| Valuation allowance | | | (33,000 | ) | | | (39,000 | ) |
| Reserve for uncertain tax positions | | | (55,000 | ) | | | (176,000 | ) |
| Total reserves & allowances | | | (88,000 | ) | | | (215,000 | ) |
| Net deferred tax liability, net of reserves | | $ | (310,250 | ) | | $ | (1,384,558 | ) |
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 $33,000 at December 31, 2023 and $39,000 at December 31, 2022, 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 reserve of $55,000 at December 31, 2023 and $176,000 at December 31, 2022, 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, 2023, 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 | | | | | | R& D & Other | |
| Expires | | State NOLs | | | Credits | |
| 2024 | | $ | - | | | $ | 3,000 | |
| 2025 | | | - | | | | 3,000 | |
| 2026 | | | - | | | | 3,000 | |
| 2027 | | | - | | | | 3,000 | |
| 2028 | | | - | | | | 3,000 | |
| 2029 | | | - | | | | 3,000 | |
| 2030 | | | - | | | | 3,000 | |
| 2031 | | | - | | | | 3,000 | |
| 2032 | | | - | | | | 3,000 | |
| 2033 | | | - | | | | 3,000 | |
| 2034 | | | - | | | | 3,000 | |
| 2035 | | | - | | | | - | |
| 2036 | | | - | | | | - | |
| 2037 | | | - | | | | - | |
| 2038 and beyond | | | - | | | | - | |
| | | $ | - | | | $ | 33,000 | |
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