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TAXES | 12 Months Ended
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Dec. 31, 2018
TAXES [Abstract] |
TAXES | 10. TAXES ﻿ On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (TCJA,) a comprehensive tax legislation which, among other things, reduced the federal income tax rate for C corporations from 35% to 21% and created a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries, effective on January 1, 2018. The TCJA makes broad and complex changes to the Internal Revenue Code which will impact the Company, including reduction of the U.S. corporate income tax rate as well as introduction of business-related exclusions, deductions and credits. As a result of the reduction in the corporate income tax rate, the Company revalued its deferred tax liabilities at December 31, 2017 and recognized a provisional tax benefit of approximately $4.5 million for the year ended December 31, 2017. ﻿ In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that, subject to an accounting policy election, taxes on GILTI inclusions can either be accounted for in deferred taxes or treated as period costs. The Company has elected to treat taxes on GILTI inclusions as period costs. ﻿ In the fourth quarter of fiscal 2018, the Company completed the analysis and computations necessary to finalize the provisional amounts reported in fiscal 2017 prior to the expiration of the December 22, 2018 applicable measurement period under SAB 118. In the third quarter of 2018 t he Company re corded a $0.6 million tax benefit that resulted in a reduction of the transition tax of $2.8 million recorded a s of December 31, 2017. The transition tax was originally recognized as part of the TCJA, due to previously undistributed earnings of $23.6 million from non-U.S. subsidiaries. ﻿ The Company accounts for income taxes in accordance with the accounting standard for “Income Taxes”, which requires an asset and liability approach to financial accounting and reporting for income taxes. Accordingly, deferred income taxes have been provided for the temporary differences between the financial reporting and the income tax basis of the Company’s assets and liabilities by applying enacted statutory tax rates applicable to future years to the basis differences. ﻿ A breakdown of our income tax expense (benefit) for the years ended December 31 is as follows: ﻿ ﻿
﻿ |  |  |  |
﻿($ in thousands) |  | 2018 |  | 2017
﻿Federal: |  |  |  |
﻿Current | $ | 2,449 | $ | 3,387
﻿Deferred |  | 475 |  | (3,765)
﻿Total Federal |  | 2,924 |  | (378)
﻿ |  |  |  |
﻿State & local: |  |  |  |
﻿Current |  | 205 |  | 65
﻿Deferred |  | 142 |  | 125
﻿Total State & local |  | 347 |  | 190
﻿ |  |  |  |
﻿Foreign |  |  |  |
﻿Current |  | 75 |  | (37)
﻿Deferred |  | - |  | -
﻿Total Foreign |  | 75 |  | (37)
﻿ |  |  |  |
﻿Total | $ | 3,346 | $ | (225)
﻿ ﻿ 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,
﻿($ in thousands) |  | 2018 |  | 2017
﻿Expected expense at statutory rate (21% in 2018, 35% in 2017) | $ | 3,766 | $ | 3,272
﻿ |  |  |  |
﻿Increase (decrease) in income taxes resulting from: |  |  |  |
﻿Change in Statutory Tax Rate |  | - |  | (4,491)
﻿Toll tax on CFC accumulated earnings and profits |  | (561) |  | 2,793
﻿Exempt income from Dominican Republic operations due to tax holiday |  | (1,005) |  | (1,802)
﻿GILTI tax |  | 515 |  | -
﻿Impact of Canadian deemed dividend |  | - |  | -
﻿State and local income taxes |  | 313 |  | 138
﻿Section 199 manufacturing deduction |  | - |  | (260)
﻿Meals and entertainment |  | 43 |  | 80
﻿Nondeductible penalties |  | 1 |  | -
﻿Provision to return filing adjustments and other |  | 274 |  | 45
﻿Total | $ | 3,346 | $ | (225)
﻿ Deferred income taxes recorded in the Consolidated Balance Sheets at December 31, 2018 and 2017 consist of the following: ﻿ ﻿
﻿ |  |  |  |
﻿($ in thousands) |  | 2018 |  | 2017
﻿Deferred tax assets: |  |  |  |
﻿ Asset reserves and accrued expenses | $ | 805 |  | 125
﻿ Inventories |  | 508 | $ | 333
﻿ State and local income taxes |  | 238 |  | 208
﻿ Pension and deferred compensation |  | 37 |  | 32
﻿ Net operating losses |  | 424 |  | 581
﻿ Total deferred tax assets |  | 2,012 |  | 1,279
﻿ Valuation allowances |  | (421) |  | (480)
﻿ Total deferred tax assets |  | 1,591 |  | 799
﻿ |  |  |  |
﻿Deferred tax liabilities: |  |  |  |
﻿ Asset reserves and accrued expenses |  | - |  | -
﻿ Fixed assets |  | 1,509 |  | 1,148
﻿ Intangible assets |  | 6,883 |  | 6,917
﻿ Other assets |  | 213 |  | 232
﻿ Tollgate tax on Lifestyle earnings |  | 228 |  | 228
﻿ State and local income taxes |  | 538 |  | -
﻿ Total deferred tax liabilities |  | 9,371 |  | 8,525
﻿ |  |  |  |
﻿Net deferred tax liability | $ | 7,780 | $ | 7,726
﻿ 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, $227,563 of tollgate tax would be due. ﻿ We are subject to tax examinations in various taxing jurisdictions. The earliest exam years open for examination are as follows: ﻿ ﻿
﻿ |  |
﻿ |  | Earliest Exam Year
﻿Taxing Authority Jurisdiction: |  |
﻿U.S. Federal |  | 2015
﻿Various U.S. States |  | 2014
﻿Puerto Rico (U.S. Territory) |  | 2013
﻿Canada |  | 2013
﻿ Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. As of December 31, 2018 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.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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