PROVISION FOR FEDERAL AND STATE INCOME TAXES

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 7: PROVISION FOR FEDERAL AND STATE INCOME TAXES

 

The provisions for income taxes are comprised of the following amounts:

	2015		2014
Current:
Federal	$	102,950	$	276,941
State		55,651		47,407
		158,601		324,348
Deferred:
Federal		132,743		(36,611)
State		14,172		(3,909)
		146,915		(40,520)
Total Provision for Income Taxes	$	305,516	$	283,828

A reconciliation of the differences between the tax provisions attributable to income from continuing operations and the tax provision at the statutory Federal income tax rate follows:

	2015		2014
Income Taxes Computed at Statutory Rate	$	278,213	$	262,954
State Income Tax,
Net of Federal Income Tax Benefit		29,703		28,074
Other, Net		(2,400)		(7,200)
Provision for Income Taxes	$	305,516	$	283,828

The Company recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously recognized in the Company’s consolidated financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated.

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2015 and 2014 were:

	2015		2014
Deferred Tax Assets resulting from:
Inventory Valuation	$	269,204	$	193,012
Allowance for Sales Returns and Related Provision for Return of Finished Goods		92,294		84,279
Prepaid Expenses		(119,664)		-
Total Deferred Tax Assets		241,834		277,291
Deferred Tax Liabilities resulting from:
Tax over Book Depreciation		(315,125)		(203,667)
Net Deferred Tax (Liability) Asset	$	(73,291)	$	73,624
The Net Deferred Tax (Liability )Asset is reflected in the Balance Sheet under these captions:
Current Deferred Income Tax Asset	$	241,834	$	277,291
Long-Term Deferred Income Tax Liability		(315,125)		(203,667)
	$	(73,291)	$	73,624

The Company follows Accounting Standards Codification Topic 740, “Income Taxes” (“ASC Topic 740”). This standard provides interpretative guidance for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the determination of the ultimate tax effects is uncertain. We record our tax provision based on current and future income taxes that will be due. In the determination of our provision, we have taken certain tax positions in the consideration of the effects of income and expenses that have been recognized and included in the accompanying consolidated financial statements that may or may not be recognized in the determination of current or future income taxes. We record a liability for these unrecognized tax benefits when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We review our liability for unrecognized tax benefits quarterly and adjust it in light of changing facts and circumstances, such as the outcome of tax audit.

As of December 31, 2015 and 2014, we do not expect that any of the tax positions taken by the Company, if challenged, would result in a significant tax liability.