Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.7.0.1
INCOME TAXES
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 13. INCOME TAXES

The components of the provision consist of the following for the years ended December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

Current:

 

 

 

 

 

 

(restated)

 

Federal

 

$

680,882

 

 

$

165,530

 

State

 

 

20,561

 

 

 

3,711

 

Total current

 

 

701,443

 

 

 

169,241

 

Deferred:

 

 

 

 

 

 

 

 

Federal

 

 

71,657

 

 

 

25,657

 

State

 

 

(2,377

)

 

 

17

 

Change in valuation allowance

 

 

 

 

 

 

      Total deferred

 

 

69,280

 

 

 

25,674

 

Income tax provision

 

$

770,723

 

 

$

194,915

 

 

The income tax provision differs from that computed at the federal statutory corporate income tax rate as follows for the years ended December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

(restated)

 

Tax provision computed at the federal statutory rate

 

$

877,282

 

 

$

238,581

 

State income tax, net of federal benefit

 

 

21,860

 

 

 

6,404

 

Permanent items

 

 

63,737

 

 

 

22,460

 

Credits

 

 

(58,159

)

 

 

(26,173

)

True ups and rounding

 

 

(115,397

)

 

 

(48,974

)

Change in valuation allowance

 

 

 

 

 

 

Uncertain tax positions

 

 

(18,600

)

 

 

2,617

 

Income tax provision

 

$

770,723

 

 

$

194,915

 

 

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following at December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

Deferred Tax Assets:

 

 

 

 

 

 

(restated)

 

Intangible assets

 

$

178,057

 

 

$

135,234

 

Research and development credits

 

 

 

 

 

115,086

 

Accruals and reserves

 

 

58,656

 

 

 

43,017

 

Credits from amended return

 

 

192,461

 

 

 

253,298

 

Other

 

 

122,744

 

 

 

77,813

 

Total deferred tax assets

 

 

551,918

 

 

 

624,448

 

 

 

 

 

 

 

 

 

 

Deferred Tax Liabilities:

 

 

 

 

 

 

 

 

Basis difference in fixed assets

 

 

(184,861

)

 

 

(145,781

)

Foreign currency exchange gains

 

 

 

 

 

(42,329

)

Total deferred tax liabilities

 

 

(184,861

)

 

 

(188,110

)

 

 

 

 

 

 

 

 

 

Net deferred tax assets

 

$

367,057

 

 

$

436,338

 

 

In accordance with ASC Topic 740, we analyzed our valuation allowance at December 31, 2016 and determined that, based upon available evidence, it is more likely than not that certain of our deferred tax assets will be realized and, as such, has removed any valuation allowance against certain deferred tax assets.  We anticipate utilization of both our foreign tax credits and research credit carryforwards.

 

The aggregate changes in the balance of gross unrecognized tax benefits (included as part of accrued expenses in the accompanying financial statements), which excludes interest and penalties, are as follows as of and for the years ended December 31, 2016 and 2015:

 

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

(restated)

 

Beginning balance:

 

$

51,074

 

 

$

42,080

 

Increases related to tax positions taken during the current year

 

 

12,572

 

 

 

8,994

 

Decreases related to expiration of statute of limitations

 

 

(6,760

)

 

 

 

Ending Balance:

 

$

56,886

 

 

$

51,074

 

 

Our total liability for unrecognized gross tax benefits was $56,886 as of December 31, 2016, which, if ultimately recognized, would impact the effective tax rate in future periods. We are subject to examination by the Internal Revenue Service for fiscal years 2013 and thereafter.  For states within the U.S. in which we conduct significant business, we remain subject to examination for fiscal year 2012 and thereafter. We have no accrual for interest or penalties related to uncertain tax positions at December 31, 2016 and 2015, and did not recognize interest or penalties in the statements of income during the years ended December 31, 2016 and 2015.

As of December 31, 2016, we expected to use our foreign tax credits of $30,332 to offset federal income tax owed in 2016.