Income Taxes

12 Months Ended

Dec. 31, 2020

Income Taxes [Abstract]

Income Taxes

11. INCOME TAXES

Income tax expense for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in thousands):

	2020		2019		2018
Current
Federal	$	28,520	$	11,024	$	16,398
State		2,285		1,825		1,048
Total current		30,805		12,849		17,446
Deferred
Federal		477		2,323		(2,393)
State		(77)		(729)		(89)
Foreign		201		4		(205)
Total deferred		601		1,598		(2,687)
Provision for income taxes	$	31,406	$	14,447	$	14,759

The total provision for income taxes for the years ended December 31, 2020, 2019 and 2018 was $31.4 million, $14.5 million and $14.8 million, respectively. Those amounts have been allocated to the following financial statement items:

	2020		2019		2018
Income from operations	$	31,406	$	14,447	$	14,759
Stockholders' equity, unrealized gains on
investment securities & foreign currency		14		75		43
Total provision for income taxes	$	31,420	$	14,522	$	14,802

Significant components of the Company’s deferred tax assets (liabilities) consisted of the following (in thousands):

	December 31, 2020		December 31, 2019
Reserves on inventory and sales	$	753	$	745
Credit and loss carryforwards		2,546		1,269
Stock compensation		1,015		756
Accrued expenses and deferred costs		3,274		2,465
Inventory capitalization		120		307
Lease obligations		2,178		3,288
Valuation allowance		(1,436)		-
Total deferred tax assets		8,450		8,830
Right-of-use assets		(2,032)		(3,114)
Unrealized loss on investment securities		(24)		(10)
Prepaid expenses		(1,022)		(1,034)
Depreciation		(4,680)		(3,365)
Total deferred tax liabilities		(7,758)		(7,523)
Net deferred tax assets	$	692	$	1,307

The reconciliation of the United States federal statutory tax provision to the Company’s provision for income taxes for the years ended December 31, 2020, 2019 and 2018 (in thousands, except percentages):

	2020			2019			2018
Statutory federal tax	$	28,196	21.0%	$	19,396	21.0%	$	14,815	21.0%
State income taxes, net of federal benefit		1,470	1.1%		864	0.9%		769	1.1%
Foreign taxes
Hong Kong		94	0.1%		1	0.0%		81	0.1%
Singapore		107	0.1%		3	0.0%		93	0.2%
Share-based compensation - windfall		(415)	(0.3)%		(6,424)	(7.0)%		(1,852)	(2.6)%
Other permanent differences		1,218	0.9%		1,004	1.1%		615	0.8%
Research and development and jobs credits		(370)	(0.3)%		(579)	(0.6)%		(85)	(0.1)%
Valuation allowance		1,342	1.0%		-	0.0%		-	0.0%
Other		(236)	(0.2)%		182	0.2%		323	0.4%
Provision for income taxes	$	31,406	23.4%	$	14,447	15.6%	$	14,759	20.9%

On March 27, 2020, the President of the United States signed into law the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). It amends the Internal Revenue Code to provide relief and supportive measures for taxpayers impacted by the outbreak of COVID-19 virus. The key components of the Act are as follows: eliminating taxable income limitation for certain net operating losses (“NOL”) and permitting carry back NOLs arising in 2018 , 2019 and 2020 to five prior tax years; accelerating refunds of previously generated Alternative Minimum Tax credit; increase business interest limitation from 30 percent to 50 percent of adjusted taxable income; amending depreciation for qualified improvement property (“QIP”) to 15- year property for QIP placed in service after December 31, 2017. The Company’s income tax provision provided under the CARES Act did not have a material impact on the year ended December 31, 2020. The Company has not placed into service material amount of QIP during tax years 2018 and 2019 but did place some amount of QIP into service these years. The impact to the Company’s 2020 earnings per common share was immaterial.

The Company has separate state and foreign net operating loss carry forwards totaling $25.6 million that start expiring in 2029. The company continues to utilize the net operating loss carry forwards in 2021. As of December 31, 2020, the Company has established a valuation allowance for the portion of the net operating loss carry forwards which is not expected to be realized.