Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. Income Taxes

The provision (benefit) for income taxes consisted of the following

:

	For the Years Ended December 31,
	2016		2015
Current	$	986,000	$	528,000
Deferred		21,000		(48,000	)
	$	1,007,000	$	480,000

Deferred income tax assets (liabilities) consisted of the following:

	December 31,
	2016			2015
Current deferred income taxes:
Foreign tax credits	$	3,000		$	66,000
Temporary differences:
Inventory reserve		101,000			107,000
Accrued expenses and inventory		334,000			311,000
Current deferred income tax assets, net	$	438,000		$	484,000
Non-current deferred income taxes:
Temporary differences:
Property and equipment	$	(683,000	)	$	(681,000	)
Intangible assets		(4,000	)		(3,000	)
Marketable securities		112,000			78,000
Basis diffence in investments		(129,000	)		(129,000	)
Foreign exchange		(12,000	)		(45,000	)
Other		(20,000	)		(12,000	)
State income taxes		(71,000	)		(75,000	)
Non-current deferred income tax liabilities		(807,000	)		(867,000	)
Net deferred income tax liability	$	(369,000	)	$	(383,000	)

The provision for income taxes differs from the amount that would be obtained by applying the US statutory rate to income before income taxes as a result of the following:

	For the Years Ended December 31,
	2016			2015
Income taxes based on US statutory rate of 34%	$	1,419,000		$	518,000
Non-deductible meals and entertainment		5,000			7,000
Domestic manufacturer's deduction		(71,000	)		(18,000	)
Foreign taxes		(169,000	)		(11,000	)
State taxes		66,000			75,000
Other		(243,000	)		(91,000	)
	$	1,007,000		$	480,000

In

2012,

the Company modified its tax reporting for Harmony, which lowers the Company’s effective tax rate. The Company recorded an uncertain tax position liability of approximately

$342,000

as of

December

31,

2012.

The uncertain tax position liability was reduced during

2013

to

$194,000

after it was determined that certain tax returns could not be amended. During the

fourth

quarter of

2016,

the statute of limitations expired on the amended returns filed by the Company in

2013,

which resulted in the reversal of the remaining

$194,000

uncertain tax position liability.

Unrecognized tax benefits during the years ended

December

31,

2016

and

2015

were as follows:

	For the Years Ended December 31,
	2016			2015
Balance as of January 1	$	194,000		$	194,000
Gross increase from tax positions taken during the year		-			-
Gross increase from tax positions taken during prior periods		-			-
Reductions to unrecognized tax benefits		(194,000	)		-
Balance as of December 31	$	-		$	194,000