(9) Income Taxes

12 Months Ended

Jun. 30, 2013

Notes

(9) Income Taxes

(9)     Income Taxes

Income tax benefit (provision) for the years ended June 30 consists of:

			Current	Deferred	Total
2013:
	U.S. federal	$	-	83,198	83,198
	State and local		-	3,556	3,556
		$	-	86,754	86,754
2012:
	U.S. federal	$	-	159,921	159,921
	State and local		-	6,785	6,785
		$	-	166,706	166,706

The actual income tax benefit (provision) differs from the “expected” tax benefit (provision) computed by applying the U.S. federal corporate income tax rate of 34% to income (loss) before income taxes for the years ended June 30, as follows:

		2013	2012
Expected tax benefit (provision)	$	44,583	64,682
State taxes, net of federal tax benefit		2,359	4,478
R&D tax credit		55,000	75,000
Incentive stock options		(10,213)	(14,246)
Other, net		(4,975)	36,792
	$	86,754	166,706

Deferred income tax assets and liabilities related to the tax effects of temporary differences are as follows as of June 30:

			2013	2012
Net deferred income tax assets – current:
	Inventory capitalization for income tax purposes	$	72,058	75,127
	Inventory reserve		127,732	114,270
	Warranty reserve		69,477	70,590
	Accrued product liability		23,228	29,835
	Allowance for doubtful accounts		96,606	78,526
Total net deferred income tax assets – current		$	389,101	368,348

			2013	2012
Net deferred income tax assets (liabilities) – non-current:
	Property and equipment, principally due to differences in depreciation	$	(262,726)	(268,839)
	Research and development credit carryover		383,226	328,927
	Other intangibles		(109,231)	(126,640)
	Operating loss carry forwards		186,172	197,992
Total net deferred income tax assets (liabilities) – non-current		$	197,441	131,440

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the years in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred income tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these temporary differences.

The Company has available at June 30, 2013 and 2012 federal and state net operating loss (“NOL”) carry forwards of $499,614 and $558,062, respectively.  The federal NOLs will expire in 2028.  The state NOLs will expire depending upon the various rules in the states in which the Company operates. 

The Company’s federal and state income tax returns for June 30, 2010, 2011, and 2012 are open tax years.