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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 9 – Income Taxes At December 31, 2019, the Company had approximately $588,000 of federal research and development tax credits. If not utilized, the research and development tax credits expire from 2034 - 2039. For the year ended December 31, 2019, the Company has provided a full valuation allowance against all of the net deferred tax assets in the amount of $2,497,414. This was based on management’s assessment, including the last two years of operating losses, that it is more likely than not that the net deferred tax assets may not be realized in the future. The expense/(benefit) for income taxes includes the following:
|  | 201 9 |  |  | 201 8 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | 58,304 |
State |  |  | (11,506 | ) |  |  | 80,367 |
Total current tax provision |  |  | (11,506 | ) |  |  | 138,671 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 1,425,414 |  |  |  | (495,233 | )
State |  |  | --- |  |  |  | --- |
Total deferred tax provision |  |  | 1,425,414 |  |  |  | (495,233 | )
Income tax expense / (benefit) |  | $ | 1,413,908 |  |  | $ | (356,562 | )
The tax effects of temporary differences giving rise to significant portions of the net deferred taxes are as follows:
|  |  |  |  | Revised |
|  | 201 9 |  |  | 201 8 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Allowance for doubtful accounts |  | $ | 5,293 |  |  | $ | 5,060 |
Inventory capitalization |  |  | 7,107 |  |  |  | 6,197 |
Depreciation and amortization |  |  | - |  |  |  | - |
Research & development tax credits |  |  | 588,096 |  |  |  | 413,680 |
Compensation costs |  |  | 202,287 |  |  |  | 356,983 |
Vacation accrual |  |  | 142,230 |  |  |  | 167,644 |
Interest expense carryforward |  |  | 144,340 |  |  |  | 66,149 |
Net operating loss carryforward |  |  | 1,798,315 |  |  |  | 832,565 |
Other items |  |  | 52,232 |  |  |  | 16,446 |
Total deferred tax asset |  |  | 2,939,900 |  |  |  | 1,864,724 |
Deferred incomes tax liability: |  |  |  |  |  |  |  |
Property and equipment - tax over book depreciation |  |  | (442,486 | ) |  |  | (439,310 | )
Less valuation allowance |  |  | (2,497,414 | ) |  |  | --- |
Net long-term deferred tax asset |  | $ | - |  |  | $ | 1,425,414 |
During the Company’s review of its deferred tax assets for the year ended December 31, 2019, it was determined that there was an error in the amounts recorded during the years ended December 31, 2018 and prior related to the deferred tax asset for stock-based compensations costs. The effects of this error were determined to be immaterial to any of the years effected. As such, the Company elected to record in this financial statement an adjustment to the prior periods as a revision. As a result of this revision, as of December 31, 2018 the deferred tax asset was reduced by $679,000 and retained earnings was reduced by $679,000. For the year ended December 31, 2018 there was no impact to the income tax benefit. The reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
|  | 201 9 |  |  | 201 8 |
Expected provision at federal statutory tax rate (21%) |  | $ | (1,031,888 | ) |  | $ | (1,167,092 | )
Provision for valuation allowance |  |  | 2,497,414 |  |  |  | - |
Foreign tax loss |  |  | 57,856 |  |  |  | 99,215 |
Adjustment to 2017 tax return |  |  | - |  |  |  | 58,304 |
State taxes, net of federal benefit |  |  | (11,506 | ) |  |  | 80,367 |
Stock-based compensation expense |  |  | - |  |  |  | 185,675 |
Federal research & development credit |  |  | (174,416 | ) |  |  | (83,245 | )
Other permanent differences |  |  | 76,448 |  |  |  | 470,214 |
Income tax expense/(benefit) |  | $ | 1,413,908 |  |  | $ | (356,562 | )
The Company’s foreign subsidiary, CVD Tantaline ApS incurred a loss of approximately $276,000, which would provide a $61,000 deferred tax asset as of December 31, 2019, based on the standard corporate tax rate of 22% in Denmark. For the year ended December 31, 2018 the Company had a loss of $463,000 which would provide a $102,000 deferred tax asset of $102,000. However, sufficient uncertainty exists as to the realizability of these assets such that a full valuation allowance has been necessary.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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