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Note 11 - Income Taxes | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
( 11 ) | INCOME TAXES
We are subject to Federal and certain state income taxes. In addition, we are taxed in certain foreign countries. Earnings (loss) before income taxes was as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Domestic |  | $ | (2,017 | ) |  | $ | 1,804 |
Foreign |  |  | 786 |  |  |  | 800 |
Total |  | $ | (1,231 | ) |  | $ | 2,604 |
Income tax expense (benefit) was as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |  |  |
Domestic – Federal |  | $ | (182 | ) |  | $ | 510 |
Domestic – state |  |  | 53 |  |  |  | 101 |
Foreign |  |  | 135 |  |  |  | 97 |
Total |  | $ | 6 |  |  | $ | 708 |
Deferred |  |  |  |  |  |  |  |
Domestic – Federal |  | $ | (299 | ) |  | $ | (413 | )
Domestic – state |  |  | (7 | ) |  |  | (13 | )
Foreign |  |  | (36 | ) |  |  | - |
Total |  |  | (342 | ) |  |  | (426 | )
Income tax expense |  | $ | (336 | ) |  | $ | 282 |
Deferred income taxes reflect the net tax effect of net operating loss and tax credit carryforwards as well as temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of our deferred tax assets and liabilities as of December 31, 2020 and 2019:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Operating lease liabilities |  | $ | 1,601 |  |  | $ | 1,123 |
Inventories |  |  | 321 |  |  |  | 247 |
Accrued vacation pay and stock-based compensation |  |  | 252 |  |  |  | 279 |
Net operating loss (state and foreign) |  |  | 241 |  |  |  | 280 |
Allowance for doubtful accounts |  |  | 44 |  |  |  | 44 |
Accrued warranty |  |  | 13 |  |  |  | 19 |
Acquisition costs |  |  | 10 |  |  |  | 12 |
Tax credit carryforwards |  |  | 5 |  |  |  | 112 |
Other |  |  | 71 |  |  |  | 13 |
Total |  |  | 2,558 |  |  |  | 2,129 |
Valuation allowance |  |  | (169 | ) |  |  | (234 | )
Deferred tax assets |  |  | 2,389 |  |  |  | 1,895 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Net intangible assets |  |  | (2,697 | ) |  |  | (2,923 | )
Right of use assets |  |  | (1,400 | ) |  |  | (1,066 | )
Depreciation of property and equipment |  |  | (214 | ) |  |  | (169 | )
Deferred tax liabilities |  |  | (4,311 | ) |  |  | (4,158 | )
Net deferred tax liabilities |  | $ | (1,922 | ) |  | $ | (2,263 | )
The net change in the valuation allowance for the years ended December 31, 2020 and 2019 was a decrease of $65 and $7, respectively. In assessing the ability to realize the deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the total deferred tax assets, we will need to generate future taxable income prior to the expiration of net operating loss and tax credit carryforwards which expire in various years through 2040. An analysis of the effective tax rate for the years ended December 31, 2020 and 2019 and a reconciliation from the expected statutory rate of 21% is as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Expected income tax expense (benefit) at U.S. statutory rate |  | $ | (259 | ) |  | $ | 547 |
Increase (decrease) in tax from: |  |  |  |  |  |  |  |
Dividend from foreign subsidiaries |  |  | 83 |  |  |  | 97 |
NOL carryforwards utilized |  |  | 64 |  |  |  | 32 |
Restricted stock compensation |  |  | 62 |  |  |  | 114 |
Global intangible low taxed income |  |  | 35 |  |  |  | 30 |
Nondeductible expenses |  |  | 8 |  |  |  | 4 |
Current year tax credits (foreign and research) |  |  | (82 | ) |  |  | (234 | )
Domestic tax benefit, net of Federal benefit |  |  | (68 | ) |  |  | (184 | )
Changes in valuation allowance |  |  | (65 | ) |  |  | (7 | )
Foreign income tax rate differences |  |  | (34 | ) |  |  | (51 | )
Section 250 foreign derived intangible income deduction |  |  | (9 | ) |  |  | (145 | )
Other |  |  | (71 | ) |  |  | 79 |
Income tax expense (benefit) |  | $ | (336 | ) |  | $ | 282 |
In accounting for income taxes, we follow the guidance in ASC Topic 740 (Income Taxes) regarding the recognition and measurement of uncertain tax positions in our financial statements. Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2020 and 2019, we did not have an accrual for uncertain tax positions. We file U.S. income tax returns and multiple state and foreign income tax returns. With few exceptions, the U.S. and state income tax returns filed for the tax years ended December 31, 2017 and thereafter are subject to examination by the relevant taxing authorities.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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