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Note 13 - Taxes | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | 13. TAXES We use the asset and liability method of accounting for income taxes based on ASC 740, Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the period in which the differences are expected to reverse Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the asset will not be realized. A breakdown of our income tax expense (benefit) for the years ended December 31 is as follows:
($ in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (926 | ) |  | $ | 3,877 |  |  | $ | 5,993 |
Deferred |  |  | 2,337 |  |  |  | (977 | ) |  |  | (1,417 | )
Total federal |  |  | 1,411 |  |  |  | 2,900 |  |  |  | 4,576 |
State & local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 140 |  |  |  | 262 |  |  |  | 1,415 |
Deferred |  |  | 148 |  |  |  | 123 |  |  |  | (247 | )
Total state & local |  |  | 288 |  |  |  | 385 |  |  |  | 1,168 |
Foreign |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 878 |  |  |  | 106 |  |  |  | 182 |
Deferred |  |  | 94 |  |  |  | 337 |  |  |  | (623 | )
Total foreign |  |  | 972 |  |  |  | 443 |  |  |  | (441 | )
Total |  | $ | 2,671 |  |  | $ | 3,728 |  |  | $ | 5,303 |
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:
|  | Year Ended December 31, |
($ in thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Expected expense at statutory rate |  | $ | 2,947 |  |  | $ | 2,975 |  |  | $ | 5,414 |
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax on repatriated earnings from foreign operations |  |  | 399 |  |  |  | 190 |  |  |  | 316 |
State and local income taxes |  |  | 227 |  |  |  | 407 |  |  |  | 734 |
Tax rate differential effect of foreign operations |  |  | 230 |  |  |  | 106 |  |  |  | 160 |
Permanent differences |  |  | 165 |  |  |  | 69 |  |  |  | 11 |
Change in valuation allowance |  |  | (200 | ) |  |  | 355 |  |  |  | - |
Provision to return filing adjustments and other |  |  | (117 | ) |  |  | 329 |  |  |  | (352 | )
Foreign tax credit |  |  | (468 | ) |  |  | (227 | ) |  |  | (348 | )
Exempt income from Dominican Republic operations due to tax holiday |  |  | (512 | ) |  |  | (476 | ) |  |  | (632 | )
Total |  | $ | 2,671 |  |  | $ | 3,728 |  |  | $ | 5,303 |
Deferred income taxes recorded in the Consolidated Balance Sheets at December 31, 2024 and 2023 consisted of the following:
($ in thousands) |  | 2024 |  |  | 2023 |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |  |
Inventories |  | $ | 3,640 |  |  | $ | 2,428 |  |  |  |
Lease assets |  |  | 1,252 |  |  |  | 1,853 |  |  |  |
Asset valuation allowances and accrued expenses |  |  | 957 |  |  |  | 967 |  |  |  |
Transaction costs |  |  | 608 |  |  |  | 684 |  |  |  |
Net operating losses |  |  | 318 |  |  |  | 866 |  |  |  |
163(J) Interest limitation |  |  | 262 |  |  |  | 4,644 |  |  |  |
State and local income taxes |  |  | 195 |  |  |  | 305 |  |  |  |
Pension and deferred compensation |  |  | 56 |  |  |  | 54 |  |  |  |
Total deferred tax assets |  |  | 7,288 |  |  |  | 11,801 |  |  |  |
Valuation allowances |  |  | (155 | ) |  |  | (355 | ) |  |  |
Total deferred tax assets |  |  | 7,133 |  |  |  | 11,446 |  |  |  |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |  |
Intangible assets |  |  | 11,908 |  |  |  | 11,713 |  |  |  |
Fixed assets |  |  | 3,231 |  |  |  | 4,166 |  |  |  |
Lease liabilities |  |  | 1,195 |  |  |  | 1,786 |  |  |  |
Other assets |  |  | 587 |  |  |  | 748 |  |  |  |
Tollgate tax on Lifestyle earnings |  |  | 228 |  |  |  | 228 |  |  |  |
State and local income taxes |  |  | 28 |  |  |  | 280 |  |  |  |
Total deferred tax liabilities |  |  | 17,177 |  |  |  | 18,921 |  |  |  |
Net deferred tax liability |  | $ | 10,044 |  |  | $ | 7,475 |  |  |  |
The valuation allowance as of December 31, 2024 is related to certain foreign income tax net operating loss carry forwards. We have provided Puerto Rico tollgate taxes on approximately $3.7 million 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, $0.2 million of tollgate tax would be due as of December 31, 2024. 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 |  |  | 2021 |
Various U.S. states |  | 2020 |
Puerto Rico (U.S. territory) |  | 2019 |
Canada |  | 2019 |
China |  | 2021 |
Mexico |  | 2021 |
United Kingdom |  | 2022 |
Australia |  | 2022 |
Our policy is to accrue interest and penalties on any uncertain tax position as a component of income tax expense. As of December 31, 2024, 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. We did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations.

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