Note D - Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Text Block]

NOTE D – INCOME TAXES

The provision for income taxes consists of the following:

	Years ended December 31,
Current	2011		2010
Federal	$	2,093,065	$	1,792,531
State		21,053		18,211
		2,114,118		1,810,742
Deferred
Federal		39,817		(94,040	)
State		1,182		(2,794	)
		40,999		(96,834	)
Total provision for income taxes	$	2,155,117	$	1,713,908

The following is a reconciliation of the Company's effective income tax rate to the Federal statutory rate (dollar amounts have been rounded to the nearest thousand):

	Years ended December 31,
	2011						2010
	($)			Tax rate			($)			Tax rate
Income taxes at statutory federal income tax rate of 34%	$	2,337,000			34	%	$	1,875,000			34	%
State income taxes, net of Federal benefit		14,000			---			12,000			---
Domestic Production Activities tax benefit		(164,000	)		(2	)		(153,000	)		(3	)
Nondeductible expenses		1,000			---			1,000			---
Prior year over-accrual		(9,000	)		---			(15,000	)		---
R&D credit		(20,000	)
Tax exempt income		(4,000	)		---			(6,000	)		---
Actual income tax expense	$	2,155,000			32 %	%	$	1,714,000			31	%

During 2011 and 2010, the Company realized the tax benefits of the Domestic Production Activities deduction, which amounted to approximately 9% of net taxable income from domestic production activities  in each year.

The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:

	Years ended December 31,
	2011			2010
Deferred tax assets
Current
Accounts receivable	$	6,101		$	7,866
Inventories		15,905			21,478
Accrued expenses		201,540			188,984
		223,546			218,328
Deferred tax liabilities
Non-current
Depreciation		(46,217	)		---
Unrealized gain on marketable securities		(18,361	)		(3,626	)
		(64,578	)		(3,626	)
Net deferred tax asset	$	158,968		$	214,702