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Note E - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

NOTE E – INCOME TAXES

 

The provision for income taxes consists of the following:

 

   

Years ended December 31,

  

Current

  

2025

    

2024

  

Federal

   $ 153,821     $ 981,244  

State

     813       805  

Total current provision for income taxes

     154,634       982,049  
                 

Deferred

                

Federal

     382,643       (124,467 )

Total deferred expense (benefit) from income taxes

     382,643       (124,467 )
                 

Total provision for income taxes

   $ 537,277     $ 857,582  

 

The following is a reconciliation of the Company’s effective income tax rate to the Federal statutory rate:

 

   

Years ended December 31,

  
    2025     2024  
      ($)    

Tax rate

       ($)    

Tax rate

  

Income taxes at statutory federal income tax rate

   $ 555,033       21.0

%

   $ 862,776       21.0

%

State taxes, net of federal benefit

     642       ---       636       ---  

Research & development credits

     (10,000

)

     (0.4 )     (9,000

)

     (0.1

)

Non-taxable dividends

     (4,441 )     (0.2 )     ---       ---  

(Over) under accrual from prior year

     (3,957 )     (0.1 )     3,170       ---  

Provision for income taxes

   $ 537,277       20.3

%

   $ 857,582       20.9

%

 

The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows:

 

   

December 31,

  
   

2025

    

2024

  

Deferred tax assets

                

Allowance for credit losses

   $ 3,605     $ 3,012  

Inventories

     6,720       6,886  

Accounts payable

     100,966       89,251  

R&D expenses

     ---       206,069  

Accrued expenses

     243,493       306,381  

Total deferred tax assets

   $ 354,784     $ 611,599  

Deferred tax liabilities

                

Accounts receivable

     (336,852

)

     (302,987

)

Prepaid expenses

     (57,682

)

     (58,171

)

Depreciation on property, plant and equipment

     (153,879

)

     (68,959

)

Unrealized gain on marketable securities

     (13,617 )     (6,085 )

Total deferred tax liabilities

     (562,030

)

     (436,202

)

Net deferred tax (liability) asset

   $ (207,246 )   $ 175,397  

 

On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act (OBBBA), was signed into law. The OBBBA includes, among other provisions, changes to United States corporate income tax law, including restoration of accelerated depreciation on capital expenditures, deductible research and development expenses, and modifications to the international tax framework. The OBBBA has multiple effective dates, with certain provisions effective in the current fiscal year and others effective in future fiscal years. The Company has estimated the tax effects of OBBBA, which did not have a material impact on its financial statements during the current period, while providing cash tax benefits in the current fiscal year due to accelerated tax deductions.