Income Taxes

9 Months Ended

Sep. 30, 2022

Income Taxes

Income Taxes

Note 9.  Income Taxes

The provision for income taxes for the nine months ended September 30, 2022 is based on our projected annual effective tax rate for fiscal year 2022, adjusted for permanent differences and specific items that are required to be recognized in the period in which they are incurred.

Following is the income tax expense for the three and nine months ended September 30:

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Federal - deferred	$	155,900	$	185,183	$	288,000	$	316,185
State and local		11,475		15,006		23,575		22,097
	$	167,375	$	200,189	$	311,575	$	338,282

Deferred tax assets and liabilities result from temporary differences in the recognition of income and expense for tax and financial reporting purposes. The Company had net operating loss carryforwards available for federal and state tax purposes of approximately $2,100,000 at December 31, 2021, which expire in varying amounts through 2041.

As of December 31, 2021, management determined that there was sufficient positive evidence to conclude that it is more likely than not that deferred taxes of $663,820 were realizable principally because we achieved five consecutive years of pretax income, expect profits to continue for the foreseeable future and implemented new efficiencies in the Company’s manufacturing process. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. Accordingly, management determined that no valuation allowance was necessary, and the deferred tax asset was $375,820 at September 30, 2022.