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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2019
INCOME TAXES [Abstract] |
Provision for Income Taxes | The provision for income taxes consists of the following:
|  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Income Tax Provision |  |  |  |  | Restated |  |  | Restated |
Current provision: |  |  |  |  |  |  |  |  |
Federal |  | $ | (582,502 | ) |  | $ | 879,822 |  |  | $ | 2,999,960 |
State |  |  | 7,341 |  |  |  | 223,156 |  |  |  | 343,954 |
Foreign |  |  | (10,477 | ) |  |  | 356,199 |  |  |  | 544,495 |
Interest expense related to UTB |  |  | 25,640 |  |  |  | 80,868 |  |  |  | 45,942 |
|  |  | (559,998 | ) |  |  | 1,540,045 |  |  |  | 3,934,351 |
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (94,001 | ) |  |  | 194,735 |  |  |  | (59,918 | )
State |  |  | (23,559 | ) |  |  | 36,629 |  |  |  | (52,637 | )
Foreign |  |  | (12,905 | ) |  |  | 42,045 |  |  |  | 38,036 |
|  |  | (130,465 | ) |  |  | 273,409 |  |  |  | (74,519 | )
Total tax provision (benefit) |  | $ | (690,463 | ) |  | $ | 1,813,454 |  |  | $ | 3,859,832 |
Income Tax Expense from Enacted Tax Act | The Tax Act also provided for a one-time transition tax on certain foreign earnings. Because the Tax Act was enacted in 2017, we recorded an estimated $1.3 million (Restated) of income tax expense in the fourth quarter of 2017 as follows:
Transition tax on deemed repatriation of certain foreign earnings (1) |  | $ | 603,976 |
Foreign withholding taxes (1) |  |  | 290,128 |
Remeasuring deferred tax position (2) |  |  | 402,135 |
|  | $ | 1,296,239 |
(1) classified as part of the Federal current provision in 2017
(2) classified as part of the Federal deferred provision in 2017
Income (Loss) Before Income Taxes | Income (loss) before income taxes was earned in the following tax jurisdictions:
|  | Years Ended December 31, |
Income (Loss) Before Income Taxes |  | 2019 |  |  | 2018 |  |  | 2017 |
United States |  | $ | (1,960,121 | ) |  | $ | 5,352,088 |  |  | $ | 5,811,797 |
Spain |  |  | 20,595 |  |  |  | 66,799 |  |  |  | (40,505 | )
Canada |  |  | (130,878 | ) |  |  | 1,166,176 |  |  |  | 937,655 |
Australia |  |  | (169,718 | ) |  |  | 7,124 |  |  |  | (115,809 | )
United Kingdom |  |  | (354,122 | ) |  |  | (380,368 | ) |  |  | (254,862 | )
TOTAL |  | $ | (2,594,244 | ) |  | $ | 6,211,819 |  |  | $ | 6,338,276 |
Income Tax Effects of Temporary Differences Impacting Deferred Income Tax Assets and Liabilities | The income tax effects of temporary differences that give rise to significant portions of deferred income tax assets and liabilities are as follows:
Deferred income tax assets: |  | 2019 |  |  | 2018 |  |  | 2017 |
Inventory |  | $ | 468,438 |  |  | $ | 578,029 |  |  | $ | 542,820 |
Stock-based compensation |  |  | 51,430 |  |  |  | 46,165 |  |  |  | 29,332 |
Accounts receivable |  |  | 3,977 |  |  |  | - |  |  |  | 3,239 |
Sales returns |  |  | 119,404 |  |  |  | 61,251 |  |  |  | 52,205 |
Deferred revenue |  |  | - |  |  |  | 48,878 |  |  |  | 67,642 |
Accrued expenses |  |  | - |  |  |  | 222,538 |  |  |  | 227,489 |
FX gain/loss in OCI |  |  | 359,078 |  |  |  | 480,112 |  |  |  | 240,045 |
Goodwill and other intangible assets amortization |  |  | 32,670 |  |  |  | - |  |  |  | - |
Net operating loss |  |  | 459,196 |  |  |  | 344,578 |  |  |  | 337,904 |
Change in tax method |  |  | - |  |  |  | 375,595 |  |  |  | 631,015 |
Accrued bonuses |  |  | - |  |  |  | 250,355 |  |  |  | 363,710 |
Leases |  |  | 144,699 |  |  |  | - |  |  |  | - |
Other |  |  | 25 |  |  |  | - |  |  |  | - |
Total deferred income tax assets |  | $ | 1,638,917 |  |  | $ | 2,407,501 |  |  | $ | 2,495,401 |
Less: valuation allowance |  |  | (381,872 | ) |  |  | (260,313 | ) |  |  | (208,350 | )
Total deferred income tax assets, net of valuation allowance |  | $ | 1,257,045 |  |  | $ | 2,147,188 |  |  | $ | 2,287,051 |
Property and equipment depreciation |  | $ | 739,633 |  |  | $ | 897,494 |  |  | $ | 1,004,163 |
Goodwill and other intangible assets amortization |  |  | - |  |  |  | 157,401 |  |  |  | 151,983 |
Accrued expenses |  |  | 90,079 |  |  |  | - |  |  |  | - |
Total deferred income tax liabilities |  | $ | 829,712 |  |  | $ | 1,054,895 |  |  | $ | 1,156,146 |
Net deferred tax asset (liability) |  | $ | 427,333 |  |  | $ | 1,092,293 |  |  | $ | 1,130,905 |
Reconciliation of Effective Tax Rate from Statutory Rate | Below is a reconciliation of our effective tax rate from the statutory rate:
|  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Statutory rate – Federal U.S. income tax |  |  | 21% |  |  |  | 21% |  |  |  | 34% |
State and local taxes |  |  | 0% |  |  |  | 4% |  |  |  | 5% |
Impact of Tax Act |  |  | 0% |  |  |  | 0% |  |  |  | 20% |
Non-U.S. income tax at different rates |  |  | 0% |  |  |  | 3% |  |  |  | (3)% |
Permanent book/tax differences |  |  | (6)% |  |  |  | 0% |  |  |  | 1% |
Difference in tax rates in loss carryback periods |  |  | 3% |  |  |  | 0% |  |  |  | 0% |
Change in valuation allowance |  |  | (5)% |  |  |  | 1% |  |  |  | 1% |
Rate differential on UTB reversals |  |  | 13% |  |  |  | 0% |  |  |  | 0% |
Other, net |  |  | 1% |  |  |  | 0% |  |  |  | 3% |
Effective rate |  |  | 27% |  |  |  | 29% |  |  |  | 61% |
Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits (UTB) is as follows:
Fiscal Year |  | 2019 |  |  | 2018 |  |  | 2017 |
UTB at beginning of the year |  | $ | 1,415,714 |  |  | $ | 1,197,077 |  |  | $ | 937,705 |
Gross decrease to tax positions in prior periods |  |  | (1,145,227 | ) |  |  | (102,236 | ) |  |  | - |
Gross increase to tax positions in current period |  |  | - |  |  |  | 351,304 |  |  |  | 213,430 |
Interest expense |  |  | 25,640 |  |  |  | 80,869 |  |  |  | 45,942 |
Lapses in statute |  |  | - |  |  |  | (111,300 | ) |  |  | - |
UTB at end of year |  | $ | 296,127 |  |  | $ | 1,415,714 |  |  | $ | 1,197,077 |

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