Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 9. INCOME TAXES

The income tax provision consists of the following for the years ended December 31:

	2023		2022
Current tax expense	$	387,000	$	212,000
Deferred tax		10,000		340,000
Total income tax expense	$	397,000	$	552,000

The reconciliation between expected federal income tax rates and the Company’s effective federal tax rates is as follows for the years ended December 31: 

	2023						2022
	Amount			Percent			Amount			Percent
Expected federal tax	$	421,000			21.0	%	$	457,000			21.0	%
Permanent differences		2,000			0.1	%		2,000			0.1	%
State income tax, net of federal tax benefit		37,000			1.9	%		54,000			2.5	%
Foreign tax credit		(4,000	)		(0.2	)%		8,000			0.4	%
Research and Development tax credit		(52,000	)		(2.6	)%		(1,000	)		0.0	%
Other		(7,000	)		(0.1	)%		32,000			1.4	%
Total	$	397,000			20.1	%	$	552,000			25.4	%

The following table summarizes the Company’s deferred tax assets and liabilities at December 31:

	2023			2022
Current deferred tax asset (liabilities):
Accounts payable and accrued expenses	$	57,000			83,000
Accounts receivable, net		(727,000	)		(851,000	)
Inventory obsolescence		2,000			1,000
Prepaid expenses		(83,000	)		(85,000	)
Customer deposits		180,000			348,000
Net current deferred tax liability		(571,000	)		(504,000	)
Long-term deferred tax asset (liabilities):
NOL - State		4,000			4,000
Foreign tax credit		14,000			21,000
R&D tax credit		75,000			30,000
Book - Tax depreciation		(9,000	)		0
Section 174 capitalization		73,000			36,000
Stock compensation		60,000			69,000
Investment impairment		13,000			13,000
Net long-term deferred tax asset		230,000			173,000
Net deferred tax liability	$	(341,000	)	$	(331,000	)

The company has various state net operating loss carryforwards of approximately $52,600 and other Federal and state tax credit carryforwards of approximately $110,900 that expire between 2026 and 2035 if not used.  An allowance for net operating loss carryforward is recorded when the Company believes the amount may not be collected or fully utilized.  Management believes the state net operating loss carryforward is fully collectible or will be fully utilized.