Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 - INCOME TAXES

As of December 31, 2019, the Company had net operating loss carry forwards of approximately $1,654,000, available to the Company indefinitely and up to 80% of the operating loss can be used against future taxable income. The net deferred tax liability as of December 31, 2019 and 2018 was $0 and $12,000, respectively, and is reflected in long-term liabilities in the accompanying consolidated balance sheets.

Tax benefit for income taxes differs from the amount computed using the federal US statutory income tax rate as follows:

	Year Ended December 31,
	2019			2018
Tax benefit at U.S. statutory rate	$	(88,547	)	$	(273,007	)
State income taxes, net of federal benefit		(13,260	)		(105,808	)
Tax effect of foreign operations		(3,801	)		136,696
Non-deductible items		792			706
Valuation allowance		89,959			-
Other		(76	)		(47,562	)
Income tax benefit	$	(14,933	)	$	(288,975	)

The effective tax rate was 1.6% in 2019 and 22.2% in 2018 and the statutory tax rate was 24.4% in 2019 and 25.4% in 2018.

On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. In accordance with ASC 740, the impact of a change in tax law is recorded in the period of enactment.

The income tax benefit for the years ended December 31, 2019 and 2018 consists of:

	2019			2018
Current:
Federal	$	-		$	(39,000	)
State		1,000			(11,000	)
Foreign		(4,000	)		-
Deferred:
Federal		(11,000	)		(187,000	)
State		(1,000	)		(52,000	)
Income Tax Benefit	$	(15,000	)	$	(289,000	)

The tax effects of temporary differences and carry forwards that give rise to significant portions of deferred tax assets and liabilities consist of the following:

	2019			2018
Deferred tax assets:
Net operating loss	$	416,000		$	218,000
Liabilities and reserves		25,000			116,000
Property and equipment and inventory		6,000			9,000
Stock options		85,000			75,000
		532,000			418,000
Deferred tax liabilities:
Defective warranty allowance		-			(29,000	)
Gain/loss on disposal		(9,000	)		(8,000	)
Intangible assets		(433,000	)		(393,000	)
Valuation allowance		(90,000	)		-
		(532,000	)		(430,000	)
Net deferred tax assets and liabilities	$	-		$	(12,000	)

Deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred asset will not be realized. The deferred tax assets are adjusted by a valuation allowance if, based on the weight of available evidence, it is more likely than not that a portion or all of the deferred assets will not be realized. The Companies will continue to assess the need for a valuation allowance and, to the extent it is determined that such allowance is necessary, the tax effect will be recognized in the future.