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Income taxes | 12 Months Ended
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Dec. 31, 2020
Income taxes |
Income taxes | Note 7 - Income taxes Loss before income taxes for the years ended December 31, 2020 and 2019 was $5.4 million and $25.3 million, respectively. Income tax expense (benefit) for the years ended December 31, 2020 and 2019 was ($0.2) million and $0.7 million, respectively. The income tax expense for each of the years ended December 31, 2020 and 2019 was for federal and state income tax at statutory rates applied to the adjusted pre-tax income for each of the periods. The following summarizes the (benefit) / provision for income taxes:
Years Ended December 31, |  | 2020 |  | 2019
(in thousands) |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | (428) |  | $ | (124)
State and local |  |  | 80 |  |  | 31
|  |  | (348) |  |  | (93)
Deferred: |  |  |  |  |  |
Federal |  |  | 80 |  |  | 366
State and local |  |  | 83 |  |  | 383
|  |  | 163 |  |  | 749
(Benefit) expense for income taxes |  | $ | (185) |  | $ | 656
Reconciliation of the Company’s actual tax rate to the U.S. Federal statutory rate is as follows:
Years ended December 31, |  | 2020 |  | 2019 |
Income tax rates |  |  |  |  |
- Statutory U.S. federal rate |  | 21 | % | 21 | %
- State income taxes, net of federal benefit |  | 0 | % | 0 | %
- Excess tax benefits related to stock compensation |  | 0 | % | 0 | %
- AMT credit and NOL Carryback |  | 8 | % | 1 | %
- Lobbying |  | (1) | % | 0 | %
- Meals & Entertainment |  | (1) | % | — | %
- Officer’s Life Insurance |  | 4 | % | 0 | %
- Change in valuation allowance |  | (28) | % | (25) | %
Total |  | 3 | % | (3) | %
As of December 31, 2020, the Company had NOLs of approximately $46.1 million, of which $40.7 million have no expiration date (subject to annual limitations of 80% of tax earnings) and $5.4 million expire through 2023 (subject to annual limitations of approximately $1.3 million). As of December 31, 2020, the Company had state tax NOLs of approximately $31.2 million expiring in various years. Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. The net deferred income tax assets (liabilities) consisted of the following at:
December 31, |  | 2020 |  | 2019
(in thousands) |  |  |  |  |  |
- Depreciation & amortization |  | $ | (7,424) |  | $ | (4,899)
- Reserves for doubtful accounts |  |  | 324 |  |  | 163
- Inventory reserve |  |  | 1,408 |  |  | 2,083
- Non qualified stock options |  |  | 1,219 |  |  | 965
- Net operating losses |  |  | 11,963 |  |  | 11,016
- AMT credit |  |  | — |  |  | 47
- Deferred interest |  |  | 10,114 |  |  | 8,351
- Deferred bonus |  |  | 74 |  |  | —
- Valuation allowance |  |  | (19,033) |  |  | (18,918)
Total |  |  | (1,355) |  |  | (1,192)
We review the likelihood that we will realize the benefit of our deferred tax assets, and therefore the need for valuation allowances, on an annual basis in the fourth quarter of the year, and more frequently if events indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results are considered, along with all other available positive and negative evidence. Concluding that a valuation allowance is not required is difficult when there is significant negative evidence that is objective and verifiable, such as cumulative losses in recent years. We utilize a rolling twelve quarters of pre-tax income or loss adjusted for significant permanent book to tax differences, as well as non-recurring items, as a measure of our cumulative results in recent years. Based on our assessment as of December 31, 2018 and 2019, we concluded that due to the uncertainty that the deferred tax assets will not be fully realized in the future, we recorded a valuation allowance of approximately $11.3 million during 2018, and due to additional losses, increased the valuation allowance through 2019 and December 31, 2020, with an ending balance of $19.0 million as of December 31, 2020. The Company’s 2016 and prior federal tax years have been closed. The Company operates in many states throughout the United States and, as of December 31, 2019, the state statutes of limitations remain open for tax years subsequent to 2015. The Company recognizes interest and penalties, if any, relating to income taxes as a component of the provision for income taxes.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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