INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES

INCOME TAXES

6.INCOME TAXES

Deferred tax assets and liabilities are determined based on the differences between the financial and tax basis of existing assets and liabilities using the currently enacted tax rates in effect for the year in which the differences are expected to reverse.

Income before income taxes includes the following components:

	2022		2021		2020
United States	$	21,572	$	10,947	$	31,183
Foreign		4,160		10,819		6,914
Total	$	25,732	$	21,766	$	38,097

The provision for income taxes on income consisted of the following for the years ended December 31, 2022, 2021 and 2020:

	2022		2021		2020
Current:
Federal	$	3,225	$	1,126	$	5,099
State		180		343		96
Foreign		920		3,016		2,344
		4,325		4,485		7,539
Deferred:
Federal		890		981		734
State		91		13		9
Foreign		80		32		(15)
		1,061		1,026		728
	$	5,386	$	5,511	$	8,267

The principal differences between the federal statutory tax rate and the income tax expense during the years ended December 31, 2022, 2021 and 2020 are as follows:

	2022		2021		2020
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal tax benefit	0.8	%	1.3	%	0.2	%
Excess of foreign tax over US tax on foreign income	0.5	%	3.6	%	2.3	%
Domestic tax deductions and credits	(1.3)	%	(1.6)	%	(1.0)	%
Foreign Derived Intangible Income deduction	(0.3)	%	—	%	(0.8)	%
Other	0.3	%	1.0	%	—	%
Effective tax rate	21.0	%	25.3	%	21.7	%

Deferred tax assets and liabilities are determined based on the differences between the financial and tax basis of existing assets and liabilities using the currently enacted tax rates in effect for the year in which the differences are expected to reverse.

Deferred income tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting and income tax reporting purposes. Temporary differences and carry forwards which give rise to deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows:

	2022		2021
Deferred tax assets:
Allowance for credit losses	$	268	$	229
Accruals and reserves		2,058		1,917
Research and development		1,697		—
Other		747		503
Total deferred tax assets		4,770		2,649
Deferred tax liabilities:
Property, plant, and equipment		10,989		7,811
Other		11		8
Total deferred tax liabilities		11,000		7,819
Valuation Allowance		—		—
Net deferred tax asset/(liability)	$	(6,230)	$	(5,170)

Deferred tax assets represent the future tax benefit of future deductible differences and, if it is more likely than not that a tax asset will not be realized, a valuation allowance is required to reduce the recorded deferred tax assets to net realizable value. The Company has evaluated positive and negative evidence to assess the realizability of its deferred taxes. Based on the evidence, the Company believes it is more likely than not that its deferred tax assets will be realizable. Accordingly, the Company has not included a valuation allowance against its deferred tax assets at this time.

We do not currently have plans to repatriate undistributed foreign earnings to the United States and have not determined any timeline or amount for any such future distributions.

As of December 31, 2022 and 2021, the Company had no federal net operating loss carryforwards, and a state net operating loss carryforward of approximately $1,135.  

Tax positions are evaluated in a two-step process. The Company first determines whether it is more likely than not that a position will be sustained upon examination. If a tax position meets the more-likely-than-not recognition threshold, it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being recognized. At December 31, 2022 and 2021, the Company reported no unrecognized tax benefits in the consolidated balance sheets and no activity relating to unrecognized tax positions were recognized in the consolidated statements of income.

The Company is subject to United States federal income taxes, as well as income taxes in various states and foreign jurisdictions. The Company’s 2019 and later tax years remain open to examination by the tax authorities. With few exceptions, as of December 31, 2022, the Company is no longer subject to U.S. federal, state or non-U.S. income tax examinations prior to 2019.