Note 2 - Income Taxes

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

2. INCOME TAXES

The effective tax rate for the

three

-month period ended

September 30, 2017

increased to

42.1%

compared to

35.3%

for the same period in

2016

mainly due to

$384,000

of additional tax expense from non-deductible proposed recapitalization expenses (see Note

9

).

The effective tax rate for the

nine

-month period ended

September 30, 2017

increased to

35.9%

compared to

33.8%

for the same period in

2016.

The increase in the effective tax rate for the

nine

-month period ended

September 30, 2017

was primarily due to

$384,000

of additional tax expense from non-deductible proposed recapitalization expenses, increases in the estimated state tax rates as well as a greater proportion of United States income subject to higher tax rates than Canadian income. The Company also had reduced tax expense in

2016

of

$105,000

from United States federal tax examination adjustments, net of interest and penalties, and state tax return adjustments decreasing tax expense.  These are partially offset by increased tax benefits of

$149,000

in

2017

from the exercise of options and dividends paid to non-vested shareholders.