XML 38 R24.htm IDEA: XBRL DOCUMENT v3.22.0.1
Note 15 - Income Taxes
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

15.

INCOME TAXES:

 

The United States and foreign components of Income before income taxes are as follows (in thousands):

 

  

Year Ended December 31,

 
  

2021

  

2020

  

2019

 
             

United States

 $14,000  $24,768  $32,244 

Foreign

  1,158   866   396 

Total

 $15,158  $25,634  $32,640 

 

The components of Income tax expense (benefit) are as follows (in thousands):

 

  

Year Ended December 31,

 
  

2021

  

2020

  

2019

 

Current:

            

Federal

 $2,256  $958  $174 

State

  1,064   1,342   (16

)

Foreign

  213   243   439 

Total current income tax expense

  3,533   2,543   597 

Deferred:

            

Federal

  573   4,380   3,597 

State

  (464)  (386

)

  561 

Foreign

  (7)  47   (17

)

Total deferred income tax expense

  102   4,041   4,141 

Total income tax expense

 $3,635  $6,584  $4,738 

 

The difference between the Company’s effective income tax rate and the federal statutory income tax rate is explained as follows (dollar amounts in thousands):

 

  

Year Ended December 31,

 
  

2021

  

2020

  

2019

 
             

Income tax expense at federal statutory rate

 $3,183  $5,383  $6,854 

State expense, net of federal income tax effect

  547   953   1,261 

Change in valuation allowance

  (247)  (181

)

  (3,564

)

Nondeductible expenses

  (31)  447   (24

)

Foreign rate differential

  104   78   36 

Other

  79   (96

)

  175 

Income tax expense

 $3,635  $6,584  $4,738 

Effective income tax rate

  24.0

%

  25.7

%

  14.5

%

 

The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below (in thousands):

 

  

December 31,

 
  

2021

  

2020

 

Deferred income tax assets:

        

Accrued employee benefits

 $3,125  $3,525 

Inventories

  30   73 

Trade receivable, net

  833   958 

Net operating loss carryforwards

  3,099   3,231 

Tax credit carryforwards

  2,888   2,699 
Contract assets, net  313   - 

Other

  984   389 
   11,272   10,875 

Valuation allowance

  (5,899

)

  (6,228

)

   5,373   4,647 

Deferred income tax liabilities:

        

Contract assets, net

  -

 

  (1,366

)

Property and equipment

  (12,937

)

  (12,029

)

Intangible assets

  (1,902

)

  (2,737

)

Goodwill  (129)  - 

Prepaid expenses

  (1,005

)

  (889

)

   (15,973

)

  (17,021

)

         

Net deferred income tax liabilities

 $(10,600

)

 $(12,374

)

         

Amounts are presented in the Consolidated Balance Sheets as follows:

        

Deferred income tax assets, included in Other assets

 $384  $107 

Deferred income taxes

  (10,984

)

  (12,481

)

Net deferred income tax liabilities

 $(10,600

)

 $(12,374

)

 

In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, taxable income in carryback periods, and tax planning strategies in making this assessment. The Company believes it is more likely than not it will realize the benefits of its deductible differences as of December 31, 2021, net of any valuation allowance. As of December 31, 2021, the Company continues to maintain a valuation allowance on federal tax credits, capital loss carryforwards, and select state jurisdictions.

 

As of December 31, 2021, the Company had approximately $0.4 million of federal income tax credit carryforwards, which expire on various dates between 2023 and 2026, and $0.8 million of capital loss carryforwards, which expire in 2024. As of December 31, 2021, the Company also had approximately $27.3 million of state net operating loss carryforwards, which expire on various dates between 2022 and 2038, and state income tax credit carryforwards of $4.4 million, which begin to expire in 2022. As of December 31, 2021, the Company also had approximately $4.6 million of foreign net operating loss carryforwards, which expire on various dates between 2023 and 2030.

 

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is no longer subject to United States Federal, state, or foreign income tax examinations for years before 2017.

 

A summary of the changes in the unrecognized income tax benefits is presented below (in thousands):

 

  

Year Ended December 31,

 
  

2021

  

2020

  

2019

 
             

Unrecognized income tax benefits, beginning of year

 $4,350  $4,350  $4,350 

Increases for positions taken in prior years

  16   -   - 

Unrecognized income tax benefits, end of year

 $4,366  $4,350  $4,350 

 

The Company does not believe it is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following twelve months; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affect the Company’s effective income tax rate if recognized at some point in the future.

 

The Company recognizes interest and penalties related to uncertain income tax positions in Income tax expense. As of December 31, 2021, the Company had approximately $0 accrued interest related to uncertain income tax positions, and none as of December 31, 2020. Total interest for uncertain income tax positions did not change materially in 2021, 2020, or 2019.

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law making significant changes to the Internal Revenue Code. Changes included, but were not limited to, a federal corporate income tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. On January 1, 2019, the Company adopted Accounting Standards Update No. 2018‑02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” (“ASU 2018‑02”), which resulted in a reclassification of $0.2 million from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the TCJA.