Note 10 - Income Taxes

6 Months Ended

Jul. 02, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(10)         Income Taxes

A valuation allowance against deferred tax assets is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. In December 2018, the Company established a valuation allowance reserve, as it is judged more likely than not that all or a portion of its deferred tax assets will not be utilized before they expire. This decision was reached after giving greater weight to the Company’s losses in recent years as compared to its forecasts.

In September 2021, this decision was reevaluated in light of the Company’s recent profitability and its forecasts for future profitability. The Company concluded that it is “more likely than not” that the Company will be able to fully utilize the deferred tax asset. This reversal of the valuation allowance was made net of the expected tax liability for 2021. For the second quarter of 2022 a charge against the tax asset of $215,966 for the estimated tax liability on Q2 income was made. For the 6 months ended July 2, 2022, a charge against the tax asset of $341,258 was made for the estimated tax liability on year-to-date income.