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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

10 - INCOME TAXES

 

Income tax provision is summarized as follows:

 

   

Year Ended December 31,

  
   

2021

    

2020

  

Current:

                

Federal

   $ 318,000     $ -  

State

     70,000       4,000  
      388,000       4,000  

Deferred:

                

Federal

     124,000       310,000  

State

     88,000       160,000  

Decrease in valuation allowance

     (212,000 )     (470,000 )
      -       -  
                 

Income tax provision

   $ 388,000     $ 4,000  

 

The actual income tax provision differs from the “expected” tax computed by applying the Federal corporate tax rate of 21% to the income before income taxes as follows:

 

   

Year Ended December 31,

  
   

2021

    

2020

  

“Expected” income tax benefit

   $ 503,000     $ 286,000  

State tax expense, net of Federal benefit

     55,000       3,000  

Decrease in valuation allowance

     (212,000 )     (470,000 )

Other

     42,000       185,000  

Income tax provision

   $ 388,000     $ 4,000  

 

The tax effects of temporary differences which give rise to significant portions of the deferred taxes are summarized as follows:

 

   

December 31,

  
   

2021

    

2020

  

Deferred tax assets:

                

Inventory reserves

   $ 1,460,000     $ 1,420,000  

Allowances for bad debts and returns

     2,000       2,000  

Accrued expenses

     22,000       21,000  

Asset valuation reserve

     539,000       539,000  

Net operating loss carry forwards

     -       213,000  

Other

     21,000       72,000  

Total deferred tax assets

     2,044,000       2,267,000  

Valuation allowance

     (1,915,000 )     (2,121,000 )
      129,000       146,000  

Deferred tax liabilities:

                

Deferred state taxes

     (129,000 )     (146,000 )

Total deferred tax liabilities

     (129,000 )     (146,000 )
                 

Net deferred tax assets

   $ -     $ -  

 

As of December 31, 2021, we have $0 in net operating loss carryforwards for federal and state income tax purposes. 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.