Entity information:
Note
4
– Income Taxes
 
The income tax provision is comprised of the following for the years ended
December
31:
 
   
Year ended December 31,
 
   
2016
    
2015
  
Current
                
State
   $
19,801
    $
64,809
 
Federal
    
67,066
     
320,931
 
     
86,867
     
385,740
 
Deferred
                
State
    
1,560
     
(19,340
 )
Federal
    
7,998
     
(26,452
 )
     
9,558
     
(45,792
 )
                 
Income tax expense
   $
96,425
    $
339,948
 
 
The reconciliation between the statutory federal income tax rate and the Company’s effective tax rate is as follows:
 
   
Year ended December 31,
 
   
2016
    
2015
  
Federal statutory rate
    
34.0
 %    
34.0
 %
State taxes
    
7.8
     
3.3
 
Nondeductible lobbying expenses
    
7.4
     
3.6
 
Other Nondeductible/Nontaxable Items 1.5 2.4
    
7.0
     
1.5
 
Other,net
    
( 2.3
 )    
-
 
Effective tax rate
    
53.9
 %    
42.4
 %
 
The Company had
$112,871
of state net operating loss carry forwards at
December
31,
2016
which will begin to expire in
2033.
The Company’s valuation allowance associated with the related deferred tax assets was
$7,442
at
December
31,
2016.
 
Deferred tax assets consist of the following as of
December
31:
 
   
December 31,
 
   
2016
    
2015
  
Intangible assets
   $
28,279
     
8,745
 
Accrued warranty expense
    
91,828
     
137,050
 
Accrued payroll
    
28,282
     
16,892
 
Share-based compensation
    
54,663
     
63,846
 
State net operation loss carryforward
    
7,442
     
7,455
 
Other,net
    
1,939
     
(11,985
 )
Valuation allowance
    
(7,442
 )    
(7,455
 )
    $
204,991
    $
214,548
 
 
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers both positive and negative evidence in making this assessment, including the future reversal of existing temporary taxable differences, projected future taxable income, any recent expiration of unused net operating losses and tax planning strategies. In
2016
and
2015,
the Company determined that its ability to realize the deferred tax asset associated with its state net operating losses does not meet the more likely than not standard. As a result, the Company established a valuation allowance against this deferred tax asset.
 
The Company continues to analyze its income tax positions and no significant income tax uncertainties were identified in
2016
and
2015.
Therefore, the Company recognized
no
tax contingencies or unrecognized tax positions for the years ended
December
31,
2016
and
2015.
The Company is not currently under examination by the Internal Revenue Service. The United States federal statute of limitations remains open for the years
2013
onward. State income tax returns are generally subject to examination for a period of
three
to
five
years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to
one
year after formal notification to the states. The Company is not currently under examination in any state jurisdictions. The Company is no longer subject to federal or state income tax assessments for years prior to
2011.