INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

6. INCOME TAXES

Income tax expense is comprised of the following (in thousands):

	December 31,
	2024			2023
Federal:
Current	$	2,660		$	467
Deferred		(1,016	)		(275	)
		1,644			192
State:
Current		640			495
Deferred		(141	)		(159	)
		499			336
Income tax expense	$	2,143		$	528

The provision for income taxes differs from the amount determined by applying the federal statutory tax rate to pre-tax income as a result of the following (in thousands):

	December 31,
	2024					2023
Income taxes at statutory rate	$	2,074		21.0	%	$	278		21.0	%
Increase (decrease) in taxes resulting from:
State income taxes, net of federal benefit		359		3.6	%		32		2.4	%
Stock compensation		(175	)	(1.8	)%		(2	)	(0.1	)%
Provision-to-return		(101	)	(1.0	)%		240		18.2	%
Other		(14	)	(0.1	)%		(20	)	(1.5	)%
Income tax expense	$	2,143		21.7	%	$	528		40.0	%

Deferred tax assets (liabilities) are as follows (in thousands):

	December 31,
	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	224		$	213
Allowance for credit losses and doubtful accounts		278			195
Accrued vacation		72			70
Deferred revenue		2,588			1,509
Equity Compensation		6			135
163(j) interest expense limitation		16			—
Lease liability		27			11
Other		209			151
Gross deferred tax assets		3,420			2,284
Deferred tax liabilities:
Retainage		(389	)		(299	)
Fixed assets		(3,371	)		(3,422	)
Prepaid expenses		(112	)		(188	)
Amortization - intangibles		(15	)		(15	)
Right-of-use asset		(27	)		(11	)
Gross deferred tax liabilities		(3,914	)		(3,935	)
Net deferred tax liability	$	(494	)	$	(1,651	)

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to realize deferred tax assets. Based upon the historical and anticipated future positive earnings, management has determined that the deferred tax assets are realizable.

As of December 31, 2024 and 2023, the Company had approximately $5,490 and $5,061 (in thousands), respectively, of state net operating losses (NOLs) available to offset future state taxable income. The state NOLs begin expiring at various times between 2028 and 2037. The Company is no longer subject to U.S. or state tax examinations for the years prior to 2020.