Entity information:
11.
Income Taxes
 
The provision
(benefit) for income taxes consisted of the following
:
 
   
For the Years Ended December 31,
 
   
2017
    
2016
  
                 
Current   $
1,415,000
     $
986,000
  
Deferred    
(378,000
 )    
21,000
  
                 
    $
1,037,000
     $
1,007,000
  
 
 
Deferred
income tax assets (liabilities) consisted of the following:
 
   
December 31,
  
   
2017
    
2016
  
                 
Current deferred income taxes:
                
Foreign tax credits
   $
-
     $
3,000
  
Temporary differences:
                
Inventory reserve
    
-
      
101,000
  
Accrued expenses and inventory
    
-
      
334,000
  
Current deferred income tax assets, net
   $
-
     $
438,000
  
                 
Non-current deferred income taxes:
                
Temporary differences:
                
Property and equipment
   $
(379,000
 )   $
(683,000
 )
Intangible assets
    
(4,000
 )    
(4,000
 )
Marketable securities
    
122,000
      
112,000
  
Inventory reserve
    
60,000
      
-
  
Accrued expenses and inventory
    
355,000
      
-
  
Basis diffence in investments
    
(80,000
 )    
(129,000
 )
Foreign exchange
    
(8,000
 )    
(12,000
 )
Other
    
(26,000
 )    
(20,000
 )
State income taxes
    
(21,000
 )    
(71,000
 )
                 
Non-current deferred income tax assets (liabilities)
    
19,000
      
(807,000
 )
                 
Net deferred income tax assets (liabilities)
   $
19,000
     $
(369,000
 )
 
The provision for income taxes differs from the amount that would be obtained by applying the U
.S. statutory rate to income before income taxes as a result of the following:
 
   
For the Years Ended December 31,
  
   
2017
    
2016
  
Income taxes based on U.S. statutory rate of 34%
   $
1,247,000
     $
1,419,000
  
Non-deductible meals and entertainment
    
6,000
      
5,000
  
Deemed foreign repatriation
    
468,000
      
-
  
Domestic manufacturer's deduction
    
(97,000
 )    
(71,000
 )
Foreign taxes
    
(500,000
 )    
(169,000
 )
State taxes
    
82,000
      
66,000
  
Effect of Federal tax rate reduction from 35% to 21%
    
(53,000
 )    
-
  
Other
    
(116,000
 )    
(243,000
 )
                 
    $
1,037,000
     $
1,007,000
  
 
In
2012,
the Company modified its tax reporting for Harmony, which lower
ed the Company’s effective tax rate. The Company recorded an uncertain tax position liability of approximately
$342,000
as of
December 31, 2012.
The uncertain tax position liability was reduced during
2013
to
$194,000
after it was determined that certain tax returns could
not
be amended. During the
fourth
quarter of
2016,
the statute of limitations expired on the amended returns filed by the Company in
2013,
which resulted in the reversal of the remaining
$194,000
uncertain tax position liability.
 
 
Unrecognized tax benefits during the
years ended
December 31, 2017
and
2016
were as follows:
 
   
For the Years Ended December 31,
  
   
2017
    
2016
  
Balance as of January 1
   $
-
     $
194,000
  
Gross increase from tax positions taken during the year
    
-
      
-
  
Gross increase from tax positions taken during prior periods
    
-
      
-
  
Reductions to unrecognized tax benefits
    
-
      
(194,000
 )
Balance as of December 31
   $
-
     $
-