Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

6.    Income Taxes

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

	Years Ended
	December 31,		December 31,
	2022		2021
	($000’s omitted)
Current:
Federal	$	19	$	41
State		—		—
		19		41
Deferred:
Federal		(589)		(84)
State		—		—
		(589)		(84)
	$	(570)	$	(43)

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

	Years Ended
	December 31,		December 31,
	2022		2021
Federal statutory rate	21.0	%	21.0	%
Permanent non-taxable income	0.2	%	0.9	%
PPP Loan Forgiveness	0.0	%	(20.9)	%
Business credits	0.1	%	(2.2)	%
Stock compensation	(0.3)	%	(0.1)	%
State taxes, net of federal benefit	(0.1)	%	0.0	%
Other	0.3	%	0.2	%
	21.2	%	(1.1)	%

At December 31, 2022 and 2021, the deferred tax assets (liabilities) were comprised of the following:

	Years Ended
	December 31,		December 31,
	2022		2021
	($000’s omitted)
Deferred Tax Assets:
Inventories	$	316	$	326
Accrued employees compensation and benefits costs		405		444
Postretirement obligation (accumulated other comprehensive income)		621		1,039
State Net operating loss and credit carryforwards		173		147
Bad debt reserve		29		28
Warranty reserve		122		107
Research and experimental expenses		615		—
Other		—		104
Total deferred tax assets		2,281		2,195
Valuation allowance		(173)		(147)
Net deferred tax assets		2,108		2,048
Deferred tax liabilities:
Prepaid expenses		(72)		(126)
Property, plant and equipment		(964)		(1,022)
Total deferred tax liabilities		(1,036)		(1,148)
Net deferred tax assets	$	1,072	$	900

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 and projections for future taxable income on existing contracts in place 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, 2022, except for a valuation allowance of $173,000 ($147,000 – 2021) related to certain state net operating loss carryforwards, state tax credit carryforwards and other state net deferred tax assets. At December 31, 2022, the Company has a New York state tax credit carryforward of approximately $173,000 ($147,000 – 2021), which begins to expire in 2023.

There are no uncertain tax positions or unrecognized tax benefits for 2022 and 2021. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2019 through 2022 Federal and state tax returns remain subject to examination.