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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

9 – INCOME TAXES

 

Income tax provision is summarized as follows:

 

   Year Ended December 31, 
   2024   2023 
Current:        
Federal  $-   $339,000 
State   11,000    62,000 
    11,000    401,000 
Deferred:          
Federal   318,000    12,000 
State   184,000    (1,000)
Decrease in valuation allowance   -    - 
    502,000    11,000 
           
Income tax provision  $513,000   $412,000 

 

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,  
    2024     2023  
“Expected” income tax benefit   $ 297,000     $ 474,000  
State tax expense, net of Federal benefit     8,000       49,000  
Permanent differences     (21,000)       -  
State deferred asset effect     (98,000)       -  
Unrealized gain     236,000       -  
Other     91,000       (111,000 )
Income tax provision   $ 513,000     $ 412,000  

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

 

   December 31, 
   2024   2023 
Deferred tax assets:        
Inventory reserves  $1,537,000   $1,534,000 
Allowances for bad debts and returns   2,000    2,000 
Accrued expenses   26,000    26,000 
Asset valuation reserve   188,000    539,000 
Other   289,000    79,000 
Total deferred tax assets   2,042,000    2,180,000 
Valuation allowance   -    - 
    2,042,000    2,180,000 
Deferred tax liabilities:          
Unrealized investment gains   (336,000)   - 
Deferred state taxes   (98,000)   (137,000)
Other   (66,000)   - 
Total deferred tax liabilities   (500,000)   (137,000)
           
Net deferred tax assets  $1,542,000   $2,043,000 

 

As of December 31, 2024, 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.