Note 6 - Income Taxes

6 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 6. INCOME TAXES

On a quarterly basis, we estimate what our effective tax rate will be for the full year and record a quarterly income tax provision based on the anticipated rate. As the year progresses, we refine our estimate based on the facts and circumstances, including discrete events, by each tax jurisdiction.

The effective tax rate for the three months ended June 30, 2021, was 38.2%, compared to a benefit of 3.2% for the three months ended June 30, 2020. The effective tax rate for the six months ended June 30, 2021 was 30.2%, compared to 65.0% for the six months ended June 30, 2020. The primary drivers of the change in the Company’s effective tax rate is attributable to the PPP loan forgiveness being non-taxable and a release in valuation allowance on the state NOLs and R&D Credits. There is also a discrete item related to an IRS exam. It is more likely than not an amount payable will be due at an estimated $44. A reserve has been set up for the anticipated adjustment. We recorded an income tax benefit of $596 and expense of $26 for the six months ended June 30, 2021 and 2020, respectively. For the three and six months ended June 30, 2021, we did not record a benefit related to the ERC. We plan to apply for the credit, however we are still completing the computation. This is not tax deductible and is thus included in our calculation of the 2021 tax rate.