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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | 7. Income Taxes The amounts of income tax expense (benefit) reflected in operations is as follows:
|  | 2012 |  |  | 2011 |
Current: |  |  |  |  |  |
Federal |  | $ | 843,812 |  |  | $ | 756,126 |
State |  |  | 115,111 |  |  |  | 88,741 |
Foreign |  |  | 523,752 |  |  |  | 532,827 |
|  |  | 1,482,675 |  |  |  | 1,377,694 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (31,374 | ) |  |  | (142,281 | )
State |  |  | (4,685 | ) |  |  | (18,802 | )
Foreign |  |  | 1,199 |  |  |  | (1,784 | )
|  |  | (34,860 | ) |  |  | (162,867 | )
|  | $ | 1,447,815 |  |  | $ | 1,214,827 |
The current state tax provision was comprised of taxes on income, the minimum capital tax and other franchise taxes related to the jurisdictions in which the Company's facilities are located. A summary of United States and foreign income before income taxes follows:
|  | 2012 |  |  | 2011 |
United States |  | $ | 2,169,451 |  |  | $ | 1,901,905 |
Foreign |  |  | 2,827,595 |  |  |  | 2,124,115 |
|  | $ | 4,997,046 |  |  | $ | 4,026,020 |
As discussed in Note 10 below, for segment reporting, Direct Import sales are included in the United States segment. However, the revenues are earned by our Hong Kong subsidiary and related income taxes are paid in Hong Kong whose rate approximates 16.5%. As such, income of the Asian subsidiary is included in the foreign income before taxes. The following schedule reconciles the amounts of income taxes computed at the United States statutory rates to the actual amounts reported in operations.
|  | 2012 |  |  | 2011 |
Federal income taxes at 34% statutory rate |  | $ | 1,698,996 |  |  | $ | 1,368,847 |
State and local taxes, net of federal income tax effect |  |  | 75,697 |  |  |  | 46,160 |
Permanent items |  |  | 79,892 |  |  |  | 7,149 |
Foreign tax rate difference |  |  | (460,351 | ) |  |  | (308,250 | )
Change in deferred income tax valuation allowance |  |  | 53,581 |  |  |  | 100,921 |
Provision for income taxes |  | $ | 1,447,815 |  |  | $ | 1,214,827 |
The following summarizes deferred income tax assets and liabilities:
|  | 2012 |  |  | 2011 |
Deferred income tax liabilities: |  |  |  |  |  |
Plant, property and equipment |  | $ | 413,160 |  |  | $ | 322,604 |
|  |  | 413,160 |  |  |  | 322,604 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Asset valuations |  |  | 543,002 |  |  |  | 426,429 |
Contribution carryforward |  |  | 157,297 |  |  |  | 296,802 |
Operating loss carryforwards and credits |  |  | 2,201,789 |  |  |  | 2,148,208 |
Pension |  |  | 448,579 |  |  |  | 467,087 |
Foreign tax credit |  |  | 43,575 |  |  |  | 48,847 |
Other |  |  | 591,066 |  |  |  | 418,938 |
|  |  | 3,985,308 |  |  |  | 3,806,311 |
Net deferred income tax asset before valuation allowance |  |  | 3,572,148 |  |  |  | 3,483,707 |
Valuation allowance |  |  | (2,201,789 | ) |  |  | (2,148,208 | )
Net deferred income tax asset |  | $ | 1,370,359 |  |  | $ | 1,335,499 |
In 2012, the Company evaluated its tax positions for years which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as a result concluded no adjustment was necessary. The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2009 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2012. In accordance with the Company’s accounting policies, any interest and penalties related to uncertain tax positions are recognized as a component of income tax expense. The Company provides deferred income taxes on foreign subsidiary earnings, which are not considered permanently reinvested. Earnings permanently reinvested would become taxable upon the sale or liquidation of a foreign subsidiary or upon the remittance of dividends. During 2012, the Company repatriated $750,000 of foreign earnings from its Canadian subsidiary. U.S. income taxes on those repatriated earnings have been partially offset by foreign tax credits. The Company plans to continue to repatriate future earnings of its Canadian subsidiary and will provide for U.S. income taxes accordingly. Foreign subsidiary earnings of $11,576,094 and $9,855,053 are considered permanently reinvested as of December 31, 2012 and 2011, respectively, and no deferred income taxes have been provided on these foreign earnings. Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance and carry forward expiration dates, the Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized. This valuation allowance is subject to periodic review, and if the allowance is reduced, the tax benefit will be recorded in future operations as a reduction of the Company's tax expense. At December 31, 2012, the Company had tax operating loss carry forwards aggregating $7,110,013, all of which were applicable to Germany, and can be carried forward indefinitely.

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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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: 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=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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=6907707&loc=d3e32537-109319 Reference 7: 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=6907707&loc=d3e32639-109319 Reference 8: 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=6907707&loc=d3e32559-109319 + Details
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