Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. INCOME TAXES 

Income tax expense for 2024 was $4,047,248 which was comprised of $3,966,438 of current income tax expense and $80,810 of deferred income tax expense, resulting in an effective tax rate of 22.9%. Income tax expense for 2023 was $3,869,355 which was comprised of $4,817,023 of current income tax expense and $947,668 of deferred income tax benefit, resulting in an effective tax rate of 22.5%. At December 31, 2024, the Company was in a prepaid tax position, recording a refundable tax asset of $1,728,754 on the consolidated balance sheet.  At December 31, 2023, the Company had accrued income taxes payable of $539,876.

A reconciliation of the provision of income taxes to the statutory federal income tax rate is as follows:

	Year Ended			Year Ended
	December 31,			December 31,
	2024			2023
Income Before Provision for Income Taxes	$	17,645,215		$	17,164,148
Statutory rate		21	%		21	%
Tax at statutory rate		3,705,495			3,604,471
State taxes, net of federal benefit		614,874			302,484
Release of FIN 48 reserve		(55,000	)		(121,000	)
Valuation allowance		199,459			-
Deferred Adjustments		-			125,935
Permanent differences		(407,446	)		(299,103	)
Return to provision adjustments		86,223			262,552
Other		(96,357	)		(5,984	)
Provision for income taxes	$	4,047,248		$	3,869,355

Deferred tax assets (liabilities) consist of the following: 

	December 31,			December 31,
	2024			2023
Inventories	$	350,927		$	176,022
Bad debts		36,480			23,197
Accrued liabilities		452,911			527,320
Prepaid expense		(233,550	)		(103,037	)
Depreciation and amortization		(3,089,986	)		(2,464,503	)
Capitalized costs		633,214			496,897
Research and development and other credit carryforwards		1,830,209			1,067,816
Right of use lease accounting		50,111			(149,876	)
Capital loss carryforward		199,459			-
Directors stock option plan		211,838			203,914
Total deferred tax asset (liability)		441,613			(222,250	)
Valuation allowance		(832,673	)		(33,000	)
Reserve for uncertain tax positions		-			(55,000	)
Total reserves & allowances		(832,673	)		(88,000	)
Net deferred tax liability, net of reserves	$	(391,060	)	$	(310,250	)

Valuation Allowance
The Company has a valuation allowance for deferred tax assets based upon certain credits that may not be fully utilized in the future. The Company believes the valuation allowance of $832,673 at December 31, 2024 and $33,000 at December 31, 2023, are adequate.

Reserve for Uncertain Tax Positions

The Company maintains a reserve for unrecognized tax benefits to the extent required in accordance with ASC 740. As of December 31, 2024, the Company had no reserve, compared to $55,000 reserved as of December 31, 2023. The relief of the reserve reflects management’s assessment that the prior reserve was conservative and that no reserve is necessary based on the current evaluation of potential tax liabilities. Due to the inherent uncertainties in this estimate, it is reasonably possible that the Company’s assessment may change in the near term, which may result in the establishment of a reserve.

Tax Credits and Net Operating losses:

At December 31, 2024, the Company has research and development (R&D) and other credit carryforwards for tax purposes which expire as follows: 

Tax Year			R& D & Other
Expires	State NOLs		Credits
2025	$	-	$	3,000
2026		-		3,000
2027		-		3,000
2028		-		3,000
2029		-		3,000
2030		-		3,000
2031		-		3,000
2032		-		3,000
2033		-		3,000
2034		-		3,000
2035		-		3,000
2036		-		-
2037		-		-
2038		-		-
2039 and beyond		-		-
	$	-	$	33,000