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9. INCOME TAXES | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
| 9. | INCOME TAXES
The Company accounts for income taxes in accordance with the accounting standard for “Income Taxes”, which requires an asset and liability approach to financial accounting and reporting for income taxes. Accordingly, deferred income taxes have been provided for the temporary differences between the financial reporting and the income tax basis of the Company’s assets and liabilities by applying enacted statutory tax rates applicable to future years to the basis differences. A breakdown of our income tax expense is as follows:
|  | Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (1,192,764 | ) |  | $ | 2,656,870 |  |  | $ | 3,656,356 |
Deferred |  |  | (296,045 | ) |  |  | 287,755 |  |  |  | 848,666 |
Total Federal |  |  | (1,488,809 | ) |  |  | 2,944,625 |  |  |  | 4,505,022 |
State & local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 151,728 |  |  |  | 81,433 |  |  |  | 203,144 |
Deferred |  |  | (349,284 | ) |  |  | 86,863 |  |  |  | 140,552 |
Total State & local |  |  | (197,556 | ) |  |  | 168,296 |  |  |  | 343,696 |
Foreign |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 164,950 |  |  |  | 13,391 |  |  |  | 46,911 |
Deferred |  |  | 42,337 |  |  |  | (41,969 | ) |  |  | 255 |
Total Foreign |  |  | 207,287 |  |  |  | (28,578 | ) |  |  | 47,166 |
Total |  | $ | (1,479,078 | ) |  | $ | 3,084,343 |  |  | $ | 4,895,884 |
A reconciliation of recorded Federal income tax expense to the expected expense computed by applying the applicable Federal statutory rate for all periods to income before income taxes follows:
|  | Years Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Expected expense at statutory rate |  | $ | (1,270,003 | ) |  | $ | 3,404,159 |  |  | $ | 5,147,234 |
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Exempt income from Dominican Republic operations due to tax holiday |  |  | (2,367,810 | ) |  |  | (2,816,963 | ) |  |  | (3,477,301 | )
Tax on repatriated earnings from Dominican Republic operations |  |  | 2,050,314 |  |  |  | 2,556,940 |  |  |  | 3,090,036 |
Impact of Canadian deemed dividend |  |  | 7,353 |  |  |  | - |  |  |  | 12,703 |
State and local income taxes |  |  | (99,699 | ) |  |  | 67,886 |  |  |  | 284,838 |
Section 199 manufacturing deduction |  |  | - |  |  |  | (194,498 | ) |  |  | (135,690 | )
Meals and entertainment |  |  | 100,288 |  |  |  | 98,082 |  |  |  | 91,475 |
Nondeductible penalties |  |  | 3,847 |  |  |  | 5,998 |  |  |  | 1,563 |
Provision to return filing adjustments and other |  |  | 96,632 |  |  |  | (37,261 | ) |  |  | (118,974 | )
Total |  | $ | (1,479,078 | ) |  | $ | 3,084,343 |  |  | $ | 4,895,884 |
Deferred income taxes recorded in the consolidated balance sheets at December 31, 2016 and 2015 consist of the following:
|  | December 31, |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Asset valuation allowances and accrued expenses |  | $ | 242,916 |  |  | $ | 510,798 |
Inventories |  |  | 491,371 |  |  |  | 563,815 |
State and local income taxes |  |  | 302,929 |  |  |  | 425,179 |
Pension and deferred compensation |  |  | 63,214 |  |  |  | 72,004 |
Net operating losses |  |  | 736,519 |  |  |  | 650,620 |
Total deferred tax assets |  |  | 1,836,949 |  |  |  | 2,222,416 |
Valuation allowances |  |  | (471,159 | ) |  |  | (569,459 | )
Total deferred tax assets |  |  | 1,365,790 |  |  |  | 1,652,957 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | (1,676,813 | ) |  |  | (1,655,838 | )
Intangible assets |  |  | (10,337,533 | ) |  |  | (11,185,988 | )
Other assets |  |  | (337,972 | ) |  |  | (400,651 | )
Tollgate tax on Lifestyle earnings |  |  | (379,271 | ) |  |  | (379,271 | )
Total deferred tax liabilities |  |  | (12,731,589 | ) |  |  | (13,621,748 | )
Net deferred tax liability |  | $ | (11,365,800 | ) |  | $ | (11,968,791 | )
Deferred income taxes - current |  | $ | 1,633,353 |  |  | $ | 1,031,818 |
Deferred income taxes - non-current |  |  | (12,999,153 | ) |  |  | (13,000,609 | )
|  | $ | (11,365,800 | ) |  | $ | (11,968,791 | )
The valuation allowance is related to certain state and local income tax net operating loss carry forwards. We have provided Puerto Rico tollgate taxes on approximately $3,684,000 of accumulated undistributed earnings of Lifestyle prior to the fiscal year ended June 30, 1994, that would be payable if such earnings were repatriated to the United States. In 2001, we received abatement for Puerto Rico tollgate taxes on all earnings subsequent to June 30, 1994, thus no other provision for tollgate tax has been made on earnings after that date. If we repatriate the earnings from Lifestyle, approximately $379,000 of tollgate tax would be due. As of December 31, 2016, we had approximately $19,205,000 of undistributed earnings from non-U.S. subsidiaries that are intended to be permanently reinvested in non-U.S. operations. Because these earnings are considered permanently reinvested, no U.S. tax provision has been accrued related to the repatriation of these earnings. If the Five Star undistributed earnings were distributed to the Company in the form of dividends, the related taxes on such distributions would be approximately $6,722,000. We file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. We are no longer subject to U.S. Federal tax examinations for years before 2013. State jurisdictions that remain subject to examination range from 2012 to 2016. Foreign jurisdiction (Canada and Puerto Rico) tax returns that remain subject to examination range from 2011 to 2016. Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. As of December 31, 2016 no such expenses were recognized during the year. We do not believe there will be any material changes in our uncertain tax positions over the next 12 months. Accounting for uncertainty in income taxes requires financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise’s financial statements. Under this guidance, income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of the standard. The Company did not have any unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing this standard.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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