Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2017

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,
	2017			2016
Current	$	1,415,000		$	986,000
Deferred		(378,000	)		21,000
	$	1,037,000		$	1,007,000

Deferred

income tax assets (liabilities) consisted of the following:

	December 31,
	2017			2016
Current deferred income taxes:
Foreign tax credits	$	-		$	3,000
Temporary differences:
Inventory reserve		-			101,000
Accrued expenses and inventory		-			334,000
Current deferred income tax assets, net	$	-		$	438,000
Non-current deferred income taxes:
Temporary differences:
Property and equipment	$	(379,000	)	$	(683,000	)
Intangible assets		(4,000	)		(4,000	)
Marketable securities		122,000			112,000
Inventory reserve		60,000			-
Accrued expenses and inventory		355,000			-
Basis diffence in investments		(80,000	)		(129,000	)
Foreign exchange		(8,000	)		(12,000	)
Other		(26,000	)		(20,000	)
State income taxes		(21,000	)		(71,000	)
Non-current deferred income tax assets (liabilities)		19,000			(807,000	)
Net deferred income tax assets (liabilities)	$	19,000		$	(369,000	)

The provision for income taxes differs from the amount that would be obtained by applying the U

.S. statutory rate to income before income taxes as a result of the following:

	For the Years Ended December 31,
	2017			2016
Income taxes based on U.S. statutory rate of 34%	$	1,247,000		$	1,419,000
Non-deductible meals and entertainment		6,000			5,000
Deemed foreign repatriation		468,000			-
Domestic manufacturer's deduction		(97,000	)		(71,000	)
Foreign taxes		(500,000	)		(169,000	)
State taxes		82,000			66,000
Effect of Federal tax rate reduction from 35% to 21%		(53,000	)		-
Other		(116,000	)		(243,000	)
	$	1,037,000		$	1,007,000

In

2012,

the Company modified its tax reporting for Harmony, which lower

ed 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, 2017

and

2016

were as follows:

	For the Years Ended December 31,
	2017		2016
Balance as of January 1	$	-	$	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	$	-	$	-