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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | 9 - INCOME TAXES Income tax provision is summarized as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
Foreign |  |  | - |  |  |  | - |
State |  |  | - |  |  |  | 6,000 |
|  |  | - |  |  |  | 6,000 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 97,000 |  |  |  | 216,000 |
State |  |  | 7,000 |  |  |  | 103,000 |
Decrease in valuation allowance |  |  | (104,000 | ) |  |  | (319,000 | )
|  |  | - |  |  |  | - |
Income tax provision |  | $ | - |  |  | $ | 6,000 |
The actual income tax provision differs from the “expected” tax computed by applying the Federal corporate tax rate of 21% to the loss before income taxes as follows:
|  | Year Ended December 31, |
|  | 2019 |  |  | 2018 |
“Expected” income tax benefit |  | $ | 204,000 |  |  | $ | 288,000 |
State tax expense, net of Federal benefit |  |  | - |  |  |  | 5,000 |
Foreign loss |  |  | (30,000 | ) |  |  | - |
Decrease in valuation allowance |  |  | (104,000 | ) |  |  | (319,000 | )
Foreign tax expense |  |  | - |  |  |  | (4,000 | )
Other |  |  | (70,000 | ) |  |  | 36,000 |
Income tax provision |  | $ | - |  |  | $ | 6,000 |
The tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows:
|  | December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventory reserves |  | $ | 1,758,000 |  |  | $ | 2,146,000 |
Allowances for bad debts and returns |  |  | 5,000 |  |  |  | 11,000 |
Accrued expenses |  |  | 21,000 |  |  |  | 19,000 |
Asset valuation reserve |  |  | 539,000 |  |  |  | 481,000 |
Net operating loss carry forwards |  |  | 283,000 |  |  |  | 136,000 |
Other |  |  | 160,000 |  |  |  | 152,000 |
Total deferred tax assets |  |  | 2,766,000 |  |  |  | 2,945,000 |
Valuation allowance |  |  | (2,587,000 | ) |  |  | (2,691,000 | )
|  |  | 179,000 |  |  |  | 254,000 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Inventory overhead deferred tax liability |  |  | - |  |  |  | (73,000 | )
Deferred state taxes |  |  | (179,000 | ) |  |  | (181,000 | )
Total deferred tax liabilities |  |  | (179,000 | ) |  |  | (254,000 | )
Net deferred tax assets |  | $ | - |  |  | $ | - |
As of December 31, 2019, we had approximately $800,000 and $1,298,000 in net operating loss carryforwards for federal and state income tax purposes, respectively. In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We consider the scheduled reversal of deferred tax assets, the level of historical taxable income and tax planning strategies in making the assessment of the realizability of deferred tax assets. We have identified the U.S. federal and California as our "major" tax jurisdiction. With limited exceptions, we remain subject to IRS examination of our income tax returns filed within the last three (3) years, and to California Franchise Tax Board examination of our income tax returns filed within the last four (4) years. As a result of the implementation of ASC 740, we recognized no material adjustment to unrecognized tax benefits. At the adoption date of January 1, 2007, we had $795,000 of unrecognized tax benefits, all of which would affect our effective tax rate if recognized. At December 31, 2019 and 2018, we have $2,587,000 and $2,691,000 of unrecognized tax benefits, respectively. We will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in our statements of operations. We have incurred no interest or penalties as of December 31, 2019 and 2018.

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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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