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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 10 – INCOME TAXES

 

The provision for income taxes consists of:

 

               
   Year Ended December 31, 
   2023   2022 
Current tax expense:          
Federal  $4,296   $34,120 
State   36,702    2,263 
           
Current tax expense   40,998    36,383 
           
Deferred tax benefit:          
Federal   (425,065)   (121,662)
State   (103,794)   (34,367)
           
Deferred tax benefit   (528,859)   (156,029)
           
Total  $(487,861)  $(119,646)

 

The effective income tax rate differs from the federal statutory rate as follows:

 

   Year Ended December 31, 
   2023   2022 
Federal statutory rate   21.00%   21.00%
State taxes, net of federal benefit   2.69%   3.60%
Permanent differences   -3.24%   -5.63%
State tax rate change   13.26%   1.13%
Prior year adjustments   -3.07%   -5.34%
Changes in tax rates and other   

-1.71

%   

0.37

%
           
Total   

28.93

%   15.13%

 

Permanent differences for the periods consist primarily of changes in non-deductible gifts, meals and entertainment as well as political contributions. Changes in tax rate are detailed above. The State tax rate change is related to a decrease in apportionable income to the States.

Net deferred tax assets and (liabilities) at December 31 consist of:

 

   December 31, 
   2023   2022 
Net operating losses  $1,246,963   $1,518,394 
Various accruals and deferred timing differences   520,170    230,574 
Prepaid expenses   (68,926)   (50,227)
Depreciation   (4,033,750)   (4,418,327)
Inventory   (576,075)   (720,891)
Net deferred tax liability  $(2,911,618)  $(3,440,477)

 

The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Interest and penalties related to income tax matters are recognized in income tax expense. The Company recognized no uncertain tax positions, or any accrued interest and penalties associated with uncertain tax positions as of December 31, 2023 and 2022.

 

FASB ASC 740 requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income within the carryforward period. Management believes that the Company will generate sufficient taxable income in the timeframe required to utilize existing net operating losses and therefore no valuation allowance has been recognized.

 

As of December 31, 2023, the Company has federal net operating loss carryforward of approximately $4,944,891 that do not expire, state net operating loss carryforwards of approximately $3,512,997 which will start expiring in 2033.