Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(9) Income Taxes

Components of income tax expense (benefit) for each year are as follows:

	2022		2021
Current:
Federal	$	1,270	$	--
State		456		11,967
Current income tax provision (benefit):		1,726		11,967
Deferred:
Federal		577,866		(2,156,278	)
State		176,676		(562,667	)
Deferred income tax provision (benefit), net		754,542		(2,718,945	)
Total	$	756,268	$	(2,706,978	)

Deferred tax assets as of December 31, 2022 and December 25, 2021 are as follows:

	December 31, 2022		December 25, 2021
Deferred Tax Assets:
Net operating loss carryforwards	$	132,632	$	1,050,449
Stock compensation		209,092		157,845
Credit carryforwards		1,253,956		1,285,119
Inventory		80,628		77,563
Accrued liabilities		5,071		12,390
Depreciation		179,481		237,880
Capitalized R&D, net		205,878		-
Other		2,698		2,732
Net deferred tax assets	$	2,069,436	$	2,823,978

At December 31, 2022 and December 25, 2021 the Company had net operating loss carryforwards of approximately $543,404 and $3,768,032, respectively, available to offset future income for U.S. Federal income tax purposes. These net operating loss carryforwards occurred over several years and do not expire.

The Company has previously established a valuation reserve against deferred income tax assets.  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.

A summary of the change in the deferred tax asset is as follows:

	2022			2021
Gross deferred tax balance at beginning of year	$	2,823,978		$	2,966,693
Deferred tax benefit (provision)		(754,542	)		(142,715	)
Valuation allowance		0			0
Balance at end of year, net	$	2,069,436		$	2,823,978

Income tax expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 21 percent to pretax income as a result of the following:

	2022		2021
Tax at statutory rate	$	578,214	$	106,869
State tax, net of federal benefit		177,036		36,301
Net operating loss and credit carryforwards		--		--
Valuation allowance		--		(2,849,693	)
Other		1,018		(455	)
Total	$	756,268	$	(2,706,978	)

The Company’s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2019 through 2022.