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3 - Income Taxes

12 Months Ended

Dec. 31, 2019

3-Income Taxes—The provision for income tax expense consists of the following:

	2019	2018
Current:
Federal……………..	$ 113,000	$ 351,000
State…………………	10,000	20,000
Deferred……………………………	22,000	184,000
	$ 145,000	$ 555,000

The following is a reconciliation of the statutory federal income tax rate to the actual effective tax rate:

	2019		2018
	Amount	%	Amount	%
Expected tax at U.S. statutory rate…………	$ 143,000	21.0	$ 537,000	21.0
Permanent differences………………………	(6,000)	(1.0)	2,000	0.1
State taxes, net of federal benefit………….	8,000	1.2	16,000	0.6
Income tax expense…………………………	$ 145,000	21.2	$ 555,000	21.7

The deferred tax assets (liabilities) consist of the following:

	2019	2018

Depreciation and amortization	$ (1,171,948)	$ (1,190,597)
Inventory	122,629	164,220
Accrued vacation	74,385	74,177
Allowance for doubtful accounts	31,500	31,500
Other, net	350	(384)
	$ (943,084)	$ (921,084)

Valuation allowances related to deferred taxes are recorded based on the “more likely than not” realization criteria. The Company reviews the need for a valuation allowance on a quarterly basis for each of its tax jurisdictions. A deferred tax valuation allowance was not required at December 31, 2019 or 2018.