Note 10 - Provision for Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 10 —    Provision for Taxes

Income before taxes and the provision for taxes consisted of the following:

In Thousands	2023			2022			2021
Income before taxes:	$	12,493		$	22,614		$	30,549
Provision (benefit) for taxes:
Current
Federal	$	3,472		$	4,149		$	4,819
State		583			720			758
		4,055			4,869			5,577
Deferred
Federal		(1,230	)		(502	)		408
State		(161	)		258			159
		(1,391	)		(244	)		567
	$	2,664		$	4,625		$	6,144

The provision for income taxes was computed based on financial statement income. A reconciliation of the provision for income taxes to the amount computed using the statutory rate follows:

In Thousands	2023			2022			2021
Income tax at statutory rate	$	2,623		$	4,749		$	6,415
Increase (decrease) in income tax resulting from
State tax expense, net of federal effect		333			773			724
Federal true-ups		(53	)		(49	)		(38	)
Federal tax credits		(405	)		(413	)		(251	)
Captive insurance earnings		(112	)		(478	)		(456	)
Incentive stock options		33			(18	)		(214	)
Other		245			61			(36	)
Recorded provision for income taxes	$	2,664		$	4,625		$	6,144

The provision for income taxes was computed based on financial statement income. In accordance with FASB ASC 740, the Company has an uncertain tax position as of and for the years ended December 31, 2023 and December 31, 2022. Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively in the Company’s financial statements. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and multiple state and foreign jurisdictions. The Company is subject to future examinations by federal, state and other tax authorities for all years after 2019.

The Company has state, net of federal benefit, research tax credit carryforwards of $319 thousand as of December 31, 2023. The state research tax credit carryforwards begin to expire in 2025. A valuation allowance has been established in the amount of $319 thousand as of December 31, 2023 related to the state tax credit carryforwards, leaving an ending deferred, net of federal benefit, in the amount of zero. The increase in the valuation allowance relates to the decrease in the projected tax liability which would be offset by the credit carryforward. The valuation allowance is based on the historical results and estimated future results of the Company, as it is the judgment of management not all of these tax carryforward attributes will be realized before they begin to expire. In addition, the Company has foreign tax credit carryforwards of $521 thousand, as of December 31, 2023. The foreign tax credit carryforwards will begin to expire in 2030.

At December 31, 2023, the Company had domestic federal income taxes receivable of $150 thousand, domestic state income taxes payable of $62 thousand, and transition tax payable of $387 thousand recorded. At December 31, 2022, the Company had domestic federal income taxes payable of $158 thousand, domestic state income taxes receivable of $87 thousand, and transition tax payable of $387 thousand recorded.

The components of the net deferred tax liabilities are as follows:

In Thousands	2023			2022
Assets
Valuation reserves	$	1,088		$	1,167
Stock based compensation		295			389
Federal and state credits		840			674
Lease obligation		2,090			2,252
Other		28			4
Capitalized research costs		2,104			605
Total assets		6,445			5,091
Liabilities
Property and equipment		(1,206	)		(1,502	)
Goodwill and intangible assets		(5,732	)		(5,347	)
Lease – right of use asset		(1,959	)		(2,127	)
Prepaid insurance		(354	)		(280	)
Total liabilities		(9,251	)		(9,256	)
Valuation Allowance
Beginning balance		(351	)		(23	)
(Increase) Decrease during period		32			(328	)
Ending balance		(319	)		(351	)
	$	(3,125	)	$	(4,516	)

The following table reconciles the total amounts of unrecognized tax benefits:

In Thousands	2023			2022			2021
Balance at beginning of year	$	20		$	61		$	61
Increases related to prior year tax positions		-			-			-
Decreases related to prior year tax positions		-			-			-
Increases related to current year tax positions		-			-			-
Settlements		-			-			-
Closure of tax years		(20	)		(41	)		-
Balance at end of year	$	--		$	20		$	61

The total amount of unrecognized tax benefits, net of federal income tax benefits, of zero at December 31, 2023, and $16 thousand at December 31, 2022, that if recognized, would affect the effective tax rate on income from continuing operations.

The Company had no accrued interest and penalties related to taxes, recognized as a liability, as of December 31, 2023.

The Company has assessed its risk associated with all tax return positions and believes its tax reserve estimate reflects its best estimate of the deductions and positions it will be able to sustain, or it may be willing to concede as part of a settlement. At this time, the Company does not anticipate any change in its tax reserves in the next twelve months. The Company will continue to monitor the progress and conclusion of all audits and will adjust its estimated liability as necessary.