Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Taxes

Income tax provision (benefit) for the years ended December 31, 2024 and 2023 is as follows:

	Year Ended December 31,
	2024			2023
Current tax expense (benefit):
Federal	$	208		$	42
State and local		(24	)		177
Total current tax expense		184			219
Deferred tax expense (benefit):
Federal		(19	)		83
State and local		12			(1	)
Total before change in valuation allowance		(7	)		82
Change in valuation allowance		—			—
Net deferred tax (benefit) expense		(7	)		82
Total income tax expense	$	177		$	301

Effective Tax Rate

A reconciliation of the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate to Income before income taxes is detailed below:

	Year Ended December 31,
	2024			2023
Income before income taxes	$	699		$	646
Tax rate		21.0	%		21.0	%
Income tax expense at federal statutory rate		147			136
Tax effect of:
State taxes, net of federal benefit		29			57
Noncontrolling interests		(19	)		(10	)
Change in rate		12			(18	)
Change in uncertain tax positions		88			41
Other		(80	)		95
Income tax expense	$	177		$	301
Effective tax rate		25.3	%		46.5	%

Deferred Tax Assets

Deferred income taxes for 2024 and 2023 were provided for the temporary differences between the financial reporting basis and the income tax basis of the Company's assets and liabilities. Tax effects of temporary differences and carryforwards as of  December 31, 2024 and 2023 were as follows:

	December 31,
	2024		2023
Deferred tax assets:
Inventory reserve	$	17	$	19
Allowance for doubtful accounts		12		15
Lease liability		72		19
Unrealized gains on marketable securities		—		3
Stock-based compensation		9		1
Depreciation and amortization		14		13
Federal tax loss carryforwards		72		77
Other reserves and accruals		35		24
Total deferred tax assets	$	231	$	171
Deferred tax liabilities:
Right-of-use asset		72		19
Total deferred tax liabilities		72		19
Net deferred tax assets before valuation allowance		159		152
Valuation allowance		—		—
Net deferred tax assets	$	159	$	152

The evaluation of the recoverability of our deferred tax asset and the need for a valuation allowance requires us to weigh all positive and negative evidence to reach a conclusion that is more likely than not that all or some of the deferred tax asset will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. 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 realizable.

As of December 31, 2024 and 2023, the Company did not record a valuation allowance against its deferred tax assets.

Uncertain Tax Benefits

Significant judgment is required in determining our provision for income taxes. In the ordinary course of business, there are many transactions for which the ultimate tax outcome is uncertain. We review our tax contingencies on a regular basis and make appropriate accruals as necessary.

As of December 31, 2024, our unrecognized tax benefits totaled $766, and are included within Other liabilities on the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Year Ended December 31,
	2024		2023
Balance, beginning of year	$	678	$	637
Additions for tax positions of prior years		88		(31	)
Additions based on tax positions related to the current year		—		72
Balance, end of year	$	766	$	678

The Company will recognize any interest and penalties related to unrecognized tax positions in income tax expense. Net adjustments to accruals for interest and penalties associated with uncertain tax positions were immaterial as of December 31, 2024. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $766. We do not expect a significant change to the amount of unrecognized tax benefits over the next 12 months. We believe that the taxes accrued in our Consolidated Balance Sheet fairly represent the amount of income taxes to be settled or realized in the future.

Tax Regulatory Matters

The Company files a consolidated U.S. federal income tax return with our eligible subsidiaries. The Company also files income tax returns in various state and local jurisdictions including California, Florida, Massachusetts, New York, and Texas.

The statute of limitations for assessment by the Internal Revenue Service ("IRS") and state tax authorities is open for tax returns for years ended December 31, 2021, 2022 and 2023; although carryforward attributes that were generated prior to tax year 2021, including NOL carryforwards and tax credits, may still be adjusted upon examination by the IRS or state tax authorities, if they either have been or will be used in a future period. The Company received notice from the IRS of an examination of its federal tax returns for the year ended December 31, 2022, the outcome of which management is unable to determine at this time.

The Company is generally subject to examinations by foreign tax authorities from 2017 to the present.