Note 9 - Income Taxes

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 9: INCOME TAXES

On

December 22, 2017,

the Tax Cuts and Jobs Act was enacted in the U.S. Tax Reform significantly lowering the amount of current and future income tax expense primarily due to the reduction in the U.S. statutory tax rate from

35.0%

to

21.0%.

This provision went into effect on

January 1, 2018

and will result in the loss of our ability to take the domestic production activities deduction which has been repealed and will require us to remeasure our deferred tax assets and liabilities. This has resulted in a higher tax rate at this time than the statutory rate.

The provision for income taxes includes the following:

	Three Months Ended March 31,
	2019			2018
Current:
Federal	$	---		$	240,924
State		3,000			9,000
Total current provision		3,000			249,924
Deferred:
Federal	$	(459,000	)	$	(2,154	)
State		------			----
Total deferred (benefit) provision		(459,000	)		(2,154	)
Income tax expense (benefit) provision	$	(456,000	)	$	247,770

Tax Rate Reconciliation

The reconciliation between the Company’s effective tax rate on income from continuing operations and the statutory rate is as follows:

	Three Months Ended
	March 31,
	2019			2018
Income tax provision at federal statutory rate (21%)	$	(552,918	)	$	169,296
Foreign tax loss		16,673			9,855
State taxes		3,000			9,000
Difference between tax and book depreciation		24,072			33,037
Stock compensation		25,002			44,860
Other Permanent differences		28,171			(18,278	)
Income tax (benefit) expense	$	(456,000	)	$	247,770

The Company’s foreign subsidiary, CVD Tantaline ApS incurred a loss of approximately

$79,000

for the

three

months ended

March 31, 2019

which would provide a

$17,000

deferred tax asset, based on the standard corporate tax rate of

22%

in Denmark. For the

three

months ended

March 31, 2018

the Company had a loss of

$47,000

with a deferred tax asset of

$10,000.

However, sufficient uncertainty exists as to the realizability of these assets such that a full valuation allowance has been necessary.