Note D - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

NOTE D – INCOME TAXES

The provision for income taxes consists of the following:

	Years ended December 31,
Current	2012		2011
Federal	$	2,015,345	$	2,093,065
State		21,011		21,053
		2,036,356		2,114,118
Deferred
Federal		57,823		39,817
State		1,718		1,182
		59,541		40,999
Total provision for income taxes	$	2,095,897	$	2,155,117

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,
	2012						2011
	($)			Tax rate			($)			Tax rate
Income taxes at statutory federal income tax rate of 34%	$	2,355,000			34.0	%	$	2,337,000			34.0	%
State income taxes, net of Federal benefit		14,000			0.2			14,000			---
Domestic Production Activities tax benefit		(167,000	)		(2.4	)		(164,000	)		(2.0	)
Nondeductible expenses		1,000			---			1,000			---
Prior year over-accrual		(24,000	)		(0.4	)		(9,000	)		---
R&D credits		(83,000	)		(12.1	)		(20,000	)
Other, misc		1,000						---
Tax exempt income		(1,000	)		---			(4,000	)		---
Actual income tax expense	$	2,096,000			30.0	%	$	2,155,000			32.0	%

During 2012 and 2011, 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,
	2012			2011
Deferred tax assets
Current
Accounts receivable	$	9,933		$	6,101
Inventories		14,348			15,905
Accrued expenses		192,307			201,540
		216,588			223,546
Deferred tax liabilities
Non-current
Depreciation		(98,800	)		(46,207	)
Unrealized gain on marketable securities		(94,940	)		(18,361	)
		(193,740	)		(64,578	)
Net deferred tax asset	$	22,848		$	158,968