Note 7 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. INCOME TAXES

The income tax provision from operations consists of the following:

Year ended December 31, (in thousands)	2024			2023
Current	$	2,430		$	2,675
Deferred		(974	)		(1,573	)
Total	$	1,456		$	1,102

The following is a reconciliation of estimated income taxes at the statutory rate from operations to estimated tax expense (benefit) as reported:

Year ended December 31,	2024			2023
Statutory rate		21	%		21	%
State and local taxes, net of federal benefit		4.7			4.7
State tax settlement		--			7.0
Research and development credit		(4.5	)		(10.4	)
Foreign tax credit		(6.1	)		(17.6	)
GILTI income inclusion		6.3			22
Other		(0.3	)		(2.2	)
Effective rate		21.1	%		24.5	%

Net deferred tax assets (liabilities) consist of the following at December 31:

(in thousands)	2024			2023
Deferred tax (liabilities) assets:
Unrealized loss on investments	$	1,045		$	1,045
IRC section 174 costs		2,173			1,566
Fixed assets		(1,178	)		(1,111	)
Other		552			118
Total deferred tax asset		2,592			1,618
Less valuation allowance		(517	)		(517	)
Net deferred tax asset	$	2,075		$	1,101

We had a net deferred tax asset of approximately $.2.1 million at December 31, 2024 and a net deferred tax asset of approximately $1.1 million at December 31, 2023, included in Other long-term assets on the Consolidated Balance Sheets. The gross deferred tax asset/liability has been offset by a valuation allowance of $0.5 million in 2024 and 2023, because the Company believes that it is more likely than not that the amount will not be realized. We have maintained a valuation allowance on deferred tax assets resulting from unrealized capital losses as we are not able to conclude that is it more likely than not that these will be realized due to the unpredictability of future capital gains. No deferred taxes have been provided on temporary differences related to investments in foreign subsidiaries because these investments are considered to be permanent.

We recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are recognized, net of a valuation allowance, for the estimated future tax effects of deductible temporary differences and tax credit carry-forwards. A valuation allowance against deferred tax assets is recorded when, and if, based upon available evidence, it is more likely than not that some or all deferred tax assets will not be realized.

We have recognized tax benefits from all tax positions we have taken, and there has been no adjustment to any carry forwards (research and development credits) in the past two years. There were no unrecognized tax benefits as of December 31, 2024 and 2023. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership equals or exceeds 80%, as well as individual subsidiary returns in various states and foreign jurisdictions. With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for returns filed more than three years ago.