INCOME TAXES

12 Months Ended

Dec. 31, 2019

INCOME TAXES [Abstract]

INCOME TAXES

8. INCOME TAXES

The provision for income taxes consists of the following:

	Year ended December 31,
	2019			2018
Current taxes:
Federal	$	5,945,534		$	4,612,874
State		58,390			40,958
Total current taxes		6,003,924			4,653,832
Deferred taxes:
Federal		(172,020	)		86,634
State		(3,064	)		3,542
Total deferred taxes		(175,084	)		90,176
Total provision for income taxes	$	5,828,840		$	4,744,008

The effective income tax rate of the Company differs from the federal statutory tax rate due to the following items:

	Year ended December 31,
	2019			2018
Statutory rate		21.00	%		21.00	%
State income taxes, net of federal income tax benefit		0.23	%		0.13	%
Stock-based compensation		(0.60	)%		(1.64	)%
Deferred rate change		-			0.01	%
Foreign dividends and earnings taxable in the U.S.		(0.66	)%		-
Miscellaneous other, net		(0.73	)%		(0.37	)%
Effective tax rate		19.24	%		19.13	%

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the carrying amounts for income tax purposes. The components of deferred income tax assets and liabilities are as follows:

	December 31,
	2019			2018
Stock option based compensation	$	50,021		$	239,492
Right of use asset		(52,515	)		-
Lease obligation		51,798			-
Section 481(a) revenue recognition deferred		(707,208	)		-
Other liabilities		85,244			74,276
Net deferred tax asset (liability)	$	(572,660	)	$	313,768

Qualified stock option compensation, recorded in the Company's consolidated financial statements, is not deductible for tax purposes which increases the Company's effective tax rate. Deferred tax assets, including those associated with non-qualified stock option compensation, are reviewed and adjusted for apportionment and tax law changes in various jurisdictions.

As of December 31, 2019, the Company has no unrecognized tax benefits or related interest and penalties. Management does not believe that there is any tax position which it is reasonably possible that will result in unrecognized tax benefit within the next 12 months.