Note 4 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

4

– Income Taxes

The income tax provision is comprised of the following for the years ended

December 31:

	Year ended December 31,
	2019		2018
Current
State	$	1,349	$	57,612
Federal		31		135,000
		1,380		192,612
Deferred
State		4,397		(6,211	)
Federal		29,544		(19,667	)
		33,941		(25,878	)
Income tax expense	$	35,321	$	166,734

The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate is as follows:

	Year ended December 31,
	2019			2018
Federal statutory rate		21.0	%		21.0	%
State taxes		6.9			8.2
Stock compensation		1.9			(0.5	)
Nondeductible lobbying expenses		17.5			3.8
Other Nondeductible/Nontaxable Items		6.4			1.2
Other, net		-			(0.2	)
Effective tax rate		53.7	%		33.5	%

Deferred tax assets consist of the following as of

December 31:

	December 31,
	2019			2018
Intangible assets	$	(4,747	)	$	(9,497	)
Accrued warranty expense		-		$	39,837
Accrued payroll		10,875			37,872
Share-based compensation		(655	)		6,713
Net operating loss carryforwards		32,138			8,909
Other, net		4,562			5,069
Property and equipment		(32,584	)		(45,371	)
Valuation allowance		(8,907	)		(8,909	)
	$	682		$	34,623

In assessing the reliability of deferred tax assets, management considers whether it is more likely than

not

that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers both positive and negative evidence in making this assessment, including the future reversal of existing temporary taxable differences, projected future taxable income, any recent expiration of unused net operating losses and tax planning strategies.

The Company continues to analyze its income tax positions and

no

significant income tax uncertainties were identified in

2019

and

2018.

Therefore, the Company recognized

no

tax contingencies or unrecognized tax positions for the years ended

December 31, 2019

and

2018.

The Company is

not

currently under examination by the Internal Revenue Service. The United States federal statute of limitations remains open for the years

2016

onward. State income tax returns are generally subject to examination for a period of

three

to

five

years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to

one

year after formal notification to the states. The Company is

not

currently under examination in any state jurisdictions. The Company is

no

longer subject to federal or state income tax assessments for years prior to

2016.