Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

The amounts of income tax expense reflected in operations is as follows:

	2024		2023
Current:
Federal	$	1,045,995	$	3,405,403
State		175,507		397,174
Foreign		537,654		544,251
Total:	$	1,759,156	$	4,346,828
Deferred:
Federal	$	480,188	$	554,763
State		30,714		39,853
Total:		510,902		594,616
Total Income Tax Expense:	$	2,270,058	$	4,941,444

A summary of United States and foreign income before income taxes follows:

	2024		2023
United States	$	9,225,285	$	18,984,939
Foreign		3,067,124		3,749,665
Total:	$	12,292,409	$	22,734,604

As discussed in Note 10 below, for segment reporting, direct import sales are included in the United States segment. However, the revenues are earned by our Hong Kong subsidiary and related income taxes are paid in Hong Kong whose rate approximates 16.5%. As such, income of the Asian subsidiary is included in the foreign income before taxes.

The following schedule reconciles the amounts of income taxes computed at the United States statutory rates to the actual amounts reported in operations:

	2024			2023
Federal income taxes at 21% statutory rate	$	2,531,261		$	4,774,267
State and local taxes, net of federal income tax effect		144,938			612,818
Stock options		(600,969	)		(385,601	)
Permanent items		251,518			183,139
Foreign tax rate difference		(56,690	)		(243,179	)
Provision for income taxes:	$	2,270,058		$	4,941,444

The following summarizes deferred income tax assets and liabilities:

	2024			2023
Deferred income tax liabilities:
Property, plant and equipment	$	2,620,900		$	2,328,345
Intangible assets		1,487,297			1,336,996
Other		887,074			609,817
Total deferred tax liabilities		4,995,271			4,275,158
Deferred income tax assets:
Net operating loss carryover		915,122			930,000
Stock compensation		2,011,200			1,964,332
Asset valuations		1,317,965			852,308
Other		201,450			559,174
Total deferred tax assets		4,445,737			4,305,814
Less: valuation allowance		(915,122	)		(930,000	)
Total deferred tax assets, net		3,530,615			3,375,814
Net deferred income tax liability:	$	1,464,656		$	899,344

The gross amount of the net operating loss available as of December 31, 2024 and 2023, with the net operating loss applying to foreign locations, is $3,050,406 and $3,100,000, respectively. These net operating loss carry forwards do not have an expiration date.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal examination for years before 2021, state and local examinations for year before 2020 and foreign examinations before 2021. The Company evaluated its tax positions for each year which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as a result, concluded no adjustment was necessary.

The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2021 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2024.

Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance of its German subsidiary, the Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized. This valuation allowance, all of which is related to deferred tax assets resulting from net operating losses of the Company’s German subsidiary of approximately $0.9 million, is subject to periodic review, and, if the allowance is reduced, the tax benefit will be recorded in future operations as a reduction of the Company's tax expense.