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INCOME TAXES | 12 Months Ended
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Dec. 29, 2018
Income Taxes [Abstract] |
INCOME TAXES | 9. Income Taxes Deferred income taxes are provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and those for income tax reporting purposes. Deferred income tax (assets) liabilities relate to:
|  | 2018 |  |  | 2017 |
Property, plant and equipment |  | $ | 2,582,792 |  |  | $ | 3,853,837 |
Intangible assets |  |  | 4,710,052 |  |  |  | 2,620,791 |
Other |  |  | 218,710 |  |  |  | 64,905 |
Foreign Withholding Tax |  |  | 540,761 |  |  |  | 861,964 |
Total deferred income tax liabilities |  |  | 8,052,315 |  |  |  | 7,401,497 |
Other postretirement benefits |  |  | (156,710 | ) |  |  | (235,510 | )
Inventories |  |  | (1,133,427 | ) |  |  | (792,724 | )
Allowance for doubtful accounts |  |  | (146,576 | ) |  |  | (97,570 | )
Accrued compensation |  |  | (200,232 | ) |  |  | (83,829 | )
Pensions |  |  | (6,127,538 | ) |  |  | (6,029,034 | )
Foreign Tax Credit |  |  | (167,826 | ) |  |  | (449,578 | )
Total deferred income tax assets |  |  | (7,932,309 | ) |  |  | (7,688,245 | )
Net deferred income tax (assets) liabilities |  | $ | 120,006 |  |  | $ | (286,748 | )
Income before income taxes consists of:
|  | 2018 |  |  | 2017 |
Domestic |  | $ | 12,431,889 |  |  | $ | 7,513,348 |
Foreign |  |  | 5,158,440 |  |  |  | 3,941,594 |
|  | $ | 17,590,329 |  |  | $ | 11,454,942 |
The provision for income taxes follows:
|  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |
Federal |  | $ | 484,451 |  |  | $ | 3,713,975 |
Foreign |  |  | 753,521 |  |  |  | 1,084,353 |
State |  |  | 347,199 |  |  |  | 319,439 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 815,858 |  |  |  | (47,241 | )
Foreign |  |  | 153,726 |  |  |  | 1,301,972 |
State |  |  | 529,637 |  |  |  | (37,189 | )
|  | $ | 3,084,392 |  |  | $ | 6,409,687 |
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows:
|  | 2018 |  |  | 2017 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
Income taxes using U.S. federal statutory rate |  | $ | 3,693,968 |  |  |  | 21 | % |  | $ | 3,894,680 |  |  |  | 34 | %
State income taxes, net of federal benefit |  |  | 692,698 |  |  |  | 4 |  |  |  | 264,205 |  |  |  | 2 |
Impact on Foreign Repatriation Tax Reform |  |  | (83,479 | ) |  |  | (1 | ) |  |  | 2,034,065 |  |  |  | 18 |
Impact of foreign subsidiaries on effective tax rate |  |  | (401,992 | ) |  |  | (2 | ) |  |  | (364,569 | ) |  |  | (3 | )
Impact of New Tax Law |  |  | (507,847 | ) |  |  | (2 | ) |  |  | 531,307 |  |  |  | 5 |
Impact of Research & Development tax credit |  |  | (216,675 | ) |  |  | (1 | ) |  |  | (60,630 | ) |  |  | (1 | )
Impact of manufacturers deduction on effective tax rate |  |  | 0 |  |  |  | 0 |  |  |  | (123,554 | ) |  |  | (1 | )
Other—net |  |  | (92,281 | ) |  |  | (1 | ) |  |  | 234,183 |  |  |  | 2 |
|  |  | 3,084,392 |  |  |  | 18 | % |  |  | 6,409,687 |  |  |  | 56 | %
Total income taxes paid were $3,741,021 in 2018 and $4,104,701 in 2017. Pursuant to the SAB118, the company is allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts and as such has adjusted for the finalization of the tax impacts in the fourth quarter of 2018. The change primarily related to deferred taxes. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act"). The Act, which is commonly referred to as "U.S. tax reform," significantly changes U.S. corporate income tax laws by, among other provisions, reducing the maximum U.S. corporate income tax rate from 35% to 21% starting in 2018, and creating a territorial tax system with a one-time mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. During the year ending December 30, 2017 and December 29, 2018, the Company recognized deferred income tax expense of $531,307 and deferred income tax benefit of $507,847, respectively, as a result of the re-measurement of deferred tax assets and liabilities to the new lower statutory rate of 21%. Due to the passage of the Tax Cut and Jobs Act, United States income taxes have been provided on the undistributed earnings of foreign subsidiaries ($19,336,428, at December 30, 2017) as well as the associated withholding taxes from the foreign countries. The amount of taxes associated with the current tax law change on the foreign earnings is $1,557,897. Foreign divisions that were previously treated as corporations for U.S. income tax purposes will generally no longer be taxed on their foreign source income by the U.S. federal government. The resulting taxes from the Tax Cut and Jobs Act of $1,557,897; $816,198 are associated with the withholding taxes assessed by the foreign countries, net of the applicable U.S. tax credits; and $741,699 in taxes are associated with the deemed repatriation of earnings held in foreign corporations. The Company has made an election to pay the $741,699 taxes in installments over 8 years with the payments due in the years 2018 to 2022 in the amount of $59,336; in the year 2023 a payment of $111,255; in the year 2024 a payment of $148,340; and the final payment in the year 2025 of $185,424. Under accounting standards (ASC 740) a deferred tax liability is not recorded for the excess the financial reporting (book) basis over the tax basis of an investment in a foreign subsidiary if the indefinite reinvestment criteria is met. Effective for foreign earnings after December 30, 2017, if such earnings are distributed in the form of cash dividends, the Company would not be subject to additional U.S. income taxes but could be subject to foreign income and withholding taxes. A provision has not been made for additional U.S. federal and foreign taxes at December 29, 2018 on approximately $4,404,920 of undistributed earnings of foreign subsidiaries because the Company intends to reinvest these funds indefinitely. It is not practicable to estimate the unrecognized deferred tax liability for withholding taxes on these undistributed earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:
|  | 2018 |  |  | 2017 |
Balance at beginning of year |  | $ | 299,734 |  |  | $ | 251,839 |
Increases for positions taken during the current period |  |  | 74,219 |  |  |  | 53,013 |
Decreases resulting from the expiration of the statute of limitations |  |  | (74,231 | ) |  |  | (5,118 | )
Balance at end of year |  | $ | 299,722 |  |  | $ | 299,734 |
The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2014 and non-U.S. income tax examinations by tax authorities prior to 2012. Included in the balance at December 29, 2018, are $236,781 of unrecognized tax benefits that would affect the annual effective tax rate. In 2018, the Company recognized accrued interest related to unrecognized tax benefits in income tax expense. The Company had approximately $51,017 of accrued interest at December 29, 2018. The total amount of unrecognized tax benefits could increase or decrease within the next twelve months for a number of reasons, including the closure of federal, state and foreign tax years by expiration of the statute of limitations and the recognition and measurement considerations under ASC 740. The Company believes that the total amount of unrecognized tax benefits will not increase or decrease significantly over the next twelve months.

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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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