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Note 10 - Income Taxes | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 1 0 – Income Taxes At December 31, 2016, the Company had approximately $27,000 in capital loss carryforwards, and $1,279,000 of federal research and development tax credits. If not utilized, the investment tax credits expire from 2016 through 2030 and the research and development tax credits expire from 2031 - 2036. Based on the available objective evidence, including the Company’s history of taxable income and the character of that income, management believes it is more likely than not that these components of the Company’s deferred tax assets will be fully utilized. The Company has provided for a partial valuation allowance against its total net deferred tax assets at December 31, 2016 and December 31, 2015 of approximately $475,000 attributable to these components. The expense/(benefit) for income taxes includes the following:
|  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | (71,070 | ) |  | $ | --- |
State |  |  | 2,504 |  |  |  | 3,070 |
Total current tax provision |  |  | (68,566 | ) |  |  | 3,070 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (435,495 | ) |  |  | 1,317,125 |
State |  |  | - |  |  |  | --- |
Total deferred tax provision |  |  | (435,495 | ) |  |  | 1,317,125 |
Income tax (benefit)/expense |  | $ | (504,061 | ) |  | $ | 1,320,195 |
In March 2014, New York State eliminated the state income tax for qualified manufacturing companies such as CVD. The tax effects of temporary differences giving rise to significant portions of the net deferred taxes are as follows:
|  | 2016 |  |  | 2015 |
Allowance for doubtful accounts |  | $ | 771 |  |  | $ | 6,345 |
Inventory capitalization |  |  | 19,071 |  |  |  | 11,540 |
Depreciation and amortization |  |  | (211,014 | ) |  |  | (228,610 | )
Investment tax credits |  |  | 475,000 |  |  |  | 475,000 |
Research & development tax credits |  |  | 1,278,690 |  |  |  | 1,134,168 |
Compensation costs |  |  | 1,000,073 |  |  |  | 730,909 |
Vacation accrual |  |  | 333,396 |  |  |  | 323,860 |
Accrued loss on legal settlement |  |  | -- |  |  |  | -- |
Net operating loss carryforward |  |  | (7,280 | ) |  |  | -- |
Capital loss carryforward |  |  | 26,627 |  |  |  | 26,627 |
Gross deferred tax asset |  |  | 2,915,334 |  |  |  | 2,479,839 |
Less valuation allowance |  |  | (475,000 | ) |  |  | (475,000 | )
Net deferred tax asset |  | $ | 2,440,334 |  |  | $ | 2,004,839 |
Net current deferred tax asset |  |  | 428,355 |  |  |  | 398,009 |
Net long-term deferred tax asset |  |  | 2,011,979 |  |  |  | 1,606,830 |
Net deferred tax asset |  | $ | 2,440,334 |  |  | $ | 2,004,839 |
The reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
|  | 2016 |  |  | 2015 |
Expected provision at federal statutory tax rate (34%) |  | $ | (222,083) |  |  | $ | 1,538,565 |
State taxes, net of federal benefit |  |  | 2,504 |  |  |  | 3,070 |
Stock-based compensation expense |  |  | (269,163 | ) |  |  | (252,288 | )
Net operating loss carryforward |  |  | (21,412 | ) |  |  | 954,581 |
Federal research & development credit |  |  | (144,522 | ) |  |  | (437,303 | )
Other permanent differences |  |  | 150,615 |  |  |  | (486,430 | )
Income tax (benefit)/expense |  | $ | (504,061 | ) |  | $ | 1,320,195 |

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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/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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
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