Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

8.    Income Taxes

The income tax (expense)/benefit included in the Consolidated Statements of Operations consists of the following:

	Years Ended December 31,
(in thousands)	2023		2022
Continuing Operations:
Current:
Federal	$	(24)	$	(61)
State		(2)		—
Total Current		(26)		(61)
Deferred:
Federal		(1,072)		626
State		—		—
Total Deferred		(1,072)		626
Total Continuing Operations	$	(1,098)	$	565
Discontinued Operation:
Current:
Federal	$	—	$	42
State		—		—
Total Current		—		42
Deferred:
Federal		—		(37)
State		—		—
Total Deferred		—		(37)
Total Discontinued Operation	$	—	$	5
Total Income Tax (Expense)/Benefit	$	(1,098)	$	570

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

	Years Ended December 31,
	2023		2022
Federal statutory rate	21.0	%	21.0	%
Permanent non-taxable income	0.2	%	(0.1)	%
Business credits	2.8	%	0.1	%
Foreign-derived intangible income deduction	0.0	%	0.0	%
State taxes, net of federal benefit	(0.1)	%	(0.1)	%
Valuation allowance	(68.6)	%	0.0	%
Other	(0.1)	%	0.3	%
	(44.8)	%	21.2	%

At December 31, 2023 and 2022, the deferred tax assets (liabilities) from continuing operations were comprised of the following:

	Years Ended December 31,
(in thousands)	2023		2022
Deferred Tax Assets:
Inventories	$	254	$	110
Accrued employees compensation and benefits costs		362		399
Postretirement adjustment (accumulated other comprehensive loss)		635		621
Accrued arbitration award and related liability		—		—
State credit carryforwards		177		173
Federal Net operating loss carryforward		1,493		—
Bad debt reserve		26		25
Warranty reserve		114		122
Research and experimentation expenses		751		615
Customer accruals		344		—
Sec 163(j) disallowed interest		83		—
Other		40		—
Minimum pension liability		—		—
Total deferred tax assets		4,279		2,065
Valuation allowance		(3,145)		(173)
Net deferred tax assets		1,134		1,892
Deferred tax liabilities:
Prepaid expenses		(71)		(70)
Property, plant and equipment		(853)		(774)
Other receivable - insurance proceeds		(210)		—
Total deferred tax liabilities		(1,134)		(844)
Net deferred tax assets	$	—	$	1,048

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 pre-tax income, as well as projections of future taxable income over the periods which deferred tax assets are deductible, management determined that it is more likely than not that the Company may not realize the net deferred tax assts recorded as of December 31, 2023. Accordingly, a valuation allowance of $3,145,000, an increase of approximately $2,972,000 from the valuation allowance of $173,000 at December 31, 2022, was recorded against net deferred tax assets at December 31, 2023. At December 31, 2023, the federal net operating loss carryforward amount is approximately $7,100,000 and has no expiration date. The Company has a New York state tax credit carryforward of approximately $219,000 at December 31, 2023 ($173,000 at December 31, 2022), which begins to expire in 2024.

There are no uncertain tax positions or unrecognized tax benefits for 2023 and 2022. The Company is subject to routine audits of its tax returns by the Internal Revenue Service and various state taxing authorities. The 2020 through 2023 federal and 2019 through 2023 state tax returns remain subject to examination.