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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

8. INCOME TAXES

 

Income tax expense consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

   2022   2021   2020 
   December 31, 
   2022   2021   2020 
   (in thousands) 
Federal Income Tax:               
Current  $7,453   $7,197   $5,617 
Deferred   (1,156)   264    (175)
                
State Income Tax:               
Current   1,126    1,062    923 
Deferred   (173)   43    (30)
                
Foreign Income Tax:               
Current   84    298    266 
Deferred   (7)   (2)   (7)
Income Tax Expense  $7,327   $8,862   $6,594 

 

Pre-tax income included foreign income of $437,000, $1,500,000, and $1,341,000 in 2022, 2021 and 2020, respectively.

 

Total income tax expense differed from statutory income tax expense, computed by applying the U.S. federal income tax rate of 21% to earnings before income tax, as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

   2022   2021   2020 
   December 31, 
   2022   2021   2020 
   (in thousands) 
Computed Statutory Income Tax Expense  $6,505   $7,362   $5,566 
State Income Tax, Net of Federal Tax Benefit   753    902    759 
Foreign Tax Rate Differential   (9)   (29)   (27)
Executive Compensation Limitation   296    773    503 
Foreign Derived Intangible Income Deduction   (98)    (107)    (75) 
Research Credit   (171)    (59)    (62) 
Other - Net   51    20    (70)
Income Tax Expense  $7,327   $8,862   $6,594 

 

 

A deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax and financial reporting purposes. The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2022 and 2021 are as follows:

SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES

   2022   2021 
   December 31, 
   2022   2021 
   (in thousands) 
Deferred Tax Assets:          
Compensation Assets  $201   $130 
Inventory Valuation   529    334 
Accounts Receivable Valuation   259    329 
Deferred Litigation Costs   12    12 
Capitalized Research Costs   590    - 
Accrued Product Liability   900    61 
Foreign Net Operating Losses   78    76 
Valuation Allowance for Loss Carryover   (78)   (76)
Other   17    37 
Compensation Liabilities   360    673 
Total Deferred Assets  $       2,868   $1,576 
           
Deferred Tax Liabilities:          
Prepaid Expenses   (592)   (544)
Depreciation and Amortization   (1,359)   (1,452)
Total Deferred Liabilities  $(1,951)  $(1,996)
           
Total Deferred Tax Asset (Liability)  $917   $(420)

 

Management believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that the deferred tax assets will be realized with the exception of a carryover of foreign operating losses. Due to the uncertainty of future income in the foreign subsidiary, the Company has recognized a valuation allowance related to the foreign operating losses carrying forward.

 

The Company is currently subject to audit by the Internal Revenue Service for the calendar years ended 2019 through 2021. The Company and its Subsidiaries’ state income tax returns are subject to audit for the calendar years ended 2018 through 2021.

 

As of December 31, 2022, the Company had no liability for unrecognized tax benefits related to various federal and state income tax matters.