XML 46 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Note 8 - Income Taxes | 9 Months Ended
--- | ---
Sep. 30, 2013
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | NOTE 8 – INCOME TAXES The Company accounts for income taxes in accordance with FASB ASC Topic 740, "Accounting for Income Taxes" which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined. The temporary differences, tax credits and carry forwards gave rise to the following deferred tax asset (liabilities) at September 30, 2013 and December 31, 2012:
|  | 2013 |  |  | 2012 |
Vacation accrual |  | $ | 4,093 |  |  | $ | 4,093 |
Allowance for doubtful Accounts |  |  | 243,314 |  |  |  | 243,314 |
Reserve for obsolete inventory |  |  | 32,844 |  |  |  | 19,925 |
Net current tax assets |  | $ | 280,251 |  |  | $ | 267,332 |
Business tax credit carryover |  |  | 25,379 |  |  |  | 25,379 |
Net operating loss carryover |  |  | 1,906,914 |  |  |  | 856,517 |
Excess of book over tax depreciation |  |  | (810,526 | ) |  |  | (805,949 | )
Long term tax asset |  | $ | 1,121,767 |  |  | $ | 75,947 |
In accordance with prevailing accounting guidance, the Company is required to recognize and disclose any income tax uncertainties. The guidance provides a two-step approach to recognizing and measuring tax benefits and liabilities when realization of the tax position is uncertain. The first step is to determine whether the tax position meets the more-likely-than-not condition for recognition and the second step is to determine the amount to be recognized based on the cumulative probability that exceeds 50%. The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which can be difficult to determine and can only be estimated. Management estimates that it is more likely than not that the Company will generate adequate net profits to use the deferred tax assets; management has estimated that all of the deferred tax will be realized and consequently, a valuation allowance was not recorded. As of September 30, 2013, the Company had net operating loss carryovers of approximately $3,685,000 for U.S. federal tax purposes expiring through 2033, approximately $980,000 for Danish tax purposes which do not expire, $110,000 for German tax purposes which do not expire and $60,000 for Singapore tax purposes which do not expire. A reconciliation of income tax expense at the federal statutory rate to income tax expense at the Company’s effective rate was as follows at September 30, 2013 and 2012:
|  | 2013 |  |  | 2012 |
Computed tax at expected statutory rate |  | $ | (1,335,240 | ) |  | $ | (346,516 | )
State and local income taxes, net of federal benefits |  |  | (15,743 | ) |  |  | (5,349 | )
Non-deductible expenses |  |  | 205,498 |  |  |  | 3,768 |
Non-US income taxed at different rates |  |  | 100,735 |  |  |  | 3,203 |
Other items |  |  | (557 | ) |  |  | (16,492 | )
Income tax expense (benefit) |  | $ | (1,045,307 | ) |  | $ | (361,386 | )
The components of income tax expense (benefit) from continuing operations for the years ended September 30, 2013 and 2012 consisted of the following:
|  | 2013 |  |  | 2012 |
Current income tax expense: |  |  |  |  |  |  |  |
Danish |  | $ | - |  |  | $ | 152,458 |
Federal |  |  | - |  |  |  | (145,020 | )
State |  |  | - |  |  |  | (45,547 | )
Current tax expense |  | $ | - |  |  | $ | (38,109 | )
Deferred tax expense (benefit) arising from: |  |  |  |  |  |  |  |
Excess of tax over financial accounting depreciation |  | $ | - |  |  | $ | 71,129 |
Net operating loss carryover |  |  | (1,032,389 | ) |  |  | (310,138 | )
Allowance for doubtful accounts |  |  | - |  |  |  | (88,820 | )
Reserve for obsolete inventory |  |  | (12,918 | ) |  |  | 4,552 |
Deferred tax expense |  | $ | (1,045,307 | ) |  | $ | (323,277 | )
Income tax expense (benefit) |  | $ | (1,045,307 | ) |  | $ | (361,386 | )
Deferred income tax expense/(benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income and net operating losses that can be used to offset taxable income in future years. The Company files Danish, U.S. federal and Minnesota state income tax returns and LiqTech International AS are generally no longer subject to tax examinations for years prior to 2007 for their Danish tax returns. LiqTech NA is generally no longer subject to tax examinations for years prior to 2008 for U.S. federal and U.S. states tax returns.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration