Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

6.    Income Taxes

The income tax provision from operations included in the consolidated statements of income consists of the following:

	Years Ended
	December 31,		December 31,
	2021		2020
	($000’s omitted)
Current:
Federal	$	41	$	(47)
State		—		(24)
		41		(71)
Deferred:
Federal		(84)		33
State		—		—
		(84)		33
	$	(43)	$	(38)

The reconciliation of the federal statutory income tax rate to the Company’s effective tax rate based upon the total income tax provision from operations is as follows:

	Years Ended
	December 31,		December 31,
	2021		2020
Federal statutory rate	21.0	%	21.0	%
Permanent non-taxable income	0.9	%	105.8	%
PPP Loan Forgiveness	(20.9)	%	0.0	%
Business credits	(2.2)	%	(61.7)	%
ESOP dividend	0.0	%	0.0	%
Stock compensation	(0.1)	%	(7.6)	%
Foreign-derived intangible income deduction	0.0	%	(55.7)	%
State taxes, net of federal benefit	0.0	%	(28.7)	%
Other	0.2	%	(34.4)	%
	(1.1)	%	(61.3)	%

At December 31, 2021 and 2020, the deferred tax assets (liabilities) were comprised of the following:

	Years Ended
	December 31,		December 31,
	2021		2020
	($000’s omitted)
Deferred Tax Assets:
Inventories	$	326	$	455
Accrued employees compensation and benefits costs		444		397
Postretirement obligation (accumulated other comprehensive income)		1,039		360
Warranty reserve		107		80
Operating loss carryforward		147		147
Bad debt reserve		28		40
Other		104		67
Total deferred tax assets		2,195		1,546
Valuation allowance		(147)		(147)
Net deferred tax assets		2,048		1,399
Deferred tax liabilities:
Prepaid expenses		(126)		(62)
Property, plant and equipment		(1,022)		(1,200)
Total deferred tax liabilities		(1,148)		(1,262)
Net deferred tax assets	$	900	$	137

In assessing the ability of the Company to realize the benefit of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Based upon the level of historical taxable income, the opportunity for net operating loss carrybacks, and projections for future taxable income over the periods which deferred tax assets are deductible, management believes it is more likely than not the Company will generate sufficient taxable income to realize the benefits of these deductible differences at December 31, 2021, except for a valuation allowance of $147,000 ($147,000 – 2020) related to certain state tax credit carryforwards. At December 31, 2021, the Company had a New York state tax credit carryforward of approximately $147,000 ($147,000 – 2020), which begins to expire in 2023.

There are no uncertain tax positions or unrecognized tax benefits for 2021 and 2020. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2018 through 2021 federal and state tax returns remain subject to examination.