Annual report [Section 13 and 15(d), not S-K Item 405]

Note 7 - Income Taxes

v3.25.4
Note 7 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

7.  Income Taxes

 ​

Deferred tax attributes resulting from differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets are as follows:

 

   

December 31,

    

December 31,

  
   

2025

    

2024

  

Deferred tax assets:

            

Accruals and reserves

   $ 3,006     $ 1,563  

Deferred rent credit

     56       92  

Depreciation and amortization

     632       635  

Total deferred tax assets

     3,694       2,290  

Deferred tax liabilities:

            

Accruals and reserves

     (1,632 )     (965 )

Depreciation and amortization

     (6,932 )     (5,855 )

Total deferred tax liabilities

     (8,564 )     (6,820 )

Net deferred tax liabilities

   $ (4,870 )   $ (4,530 )

 

The provision for income taxes is as follows:

 

   

Year ended December 31,

  
   

2025

    

2024

    

2023

  

Current:

                    

Federal

   $ 3,226     $ 4,610     $ 2,793  

State

     969       839       676  

Foreign

     2,498       1,471       1,372  

Total current tax expense

     6,693       6,920       4,841  

Deferred:

                  

Federal

     817       28       32  

State

     19       112       10  

Foreign

     (941 )     (652 )     (425 )

Total deferred tax expense (benefit)

     (105 )     (512 )     (383 )

Total income tax expense (benefit)

   $ 6,588     $ 6,408     $ 4,458  

Effective Tax Rate

     23.6 %     25.6 %     26.6 %

 

For financial reporting purposes, income before income taxes includes the following components:

 

   

Year ended December 31,

  
   

2025

    

2024

    

2023

  

United States

   $ 21,804     $ 20,961     $ 11,990  

Foreign

     6,114       4,057       4,791  
    $ 27,918     $ 25,018     $ 16,781  

 

The table below provides the updated requirements of ASU 2023- 09 for 2024. See  Note 2 (Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements) for additional details on the adoption of ASU 2023- 09.

 

The reasons for the difference between total tax expense and the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes for the year ended December 31, 2025 are as follows:
 
   

Year ended December 31, 2025

  
   

$

    

%

  

Provision for income taxes at U.S. federal statutory rate

   $ 5,863       21.0 %

State and local income taxes, net of federal benefit (1)

     780       2.8 %

Foreign tax effects

     274       1.0 %

Effects of changes in tax laws or rates enacted in the current period

     —       0.0 %

Effect of cross-border tax laws:

                

Foreign derived intangible income ("FDII")

     —       0.0 %

Other

     —       0.0 %

Tax credits:

                

Tax credits

     —       0.0 %

Non-taxable or non-deductible items:

                

Stock based compensation

     (968 )     -3.5 %

Executive compensation limitation (IRC 162m)

     691       2.5 %

Other items

     26       0.1 %

Uncertain tax positions

     —       0.0 %

Other items

     (78 )     -0.3 %

Total tax provision and effective tax rate

   $ 6,588       23.6 %

 

(1)

State taxes in California, Florida, Illinois and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category. 

 

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

 

   

Year ended December 31,

  
   

2024

    

2023

  

Statutory rate applied to pretax income

   $ 5,254     $ 3,524  

Other permanent items

     384       569  

State income taxes, net of federal income tax benefit

     752       542  

Acquisition related costs

     760       132  

Other items

     56       —  

Dividends

     (1 )     (3 )

GILTI, net of foreign tax credits

     (41 )     (11 )

Foreign income taxes (under) U.S. statutory rate

     (200 )     (46 )

Stock compensation

     (556 )     (249 )

Income tax expense

   $ 6,408     $ 4,458  

 

The Company has analyzed filing positions in all the federal, state and foreign jurisdictions where it is required to file income tax returns, as well as all open tax years in these jurisdictions. The Company has identified its federal consolidated tax return, its state tax returns, its Canadian tax return and its tax return in the United Kingdom as major tax jurisdictions. As of December 31, 2025, the Company’s 2022 through 2024 Federal tax returns remain open for examination. The Company’s various states and Canadian tax returns are open for examination for the years 2021 through 2024. The Company’s tax return in the United Kingdom is open for examination for the years 2023 and 2024. The Company’s policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. The Company believes that it has appropriate support for the income tax positions it takes and expects to take on its tax returns, and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including experience and interpretations of tax law applied to the facts of each matter.

 

The Company has approximately $11.3 million of undistributed earnings in Canada and $5.3 million of undistributed earnings in the United Kingdom and $2.2 million of undistributed earnings in Ireland, which it continues to reinvest indefinitely, and therefore no withholding taxes related to its repatriation has been recorded.

 ​

There was no activity related to the Company’s unrecognized tax benefits during the years ended December 31, 2025, 2024 and 2023.

 ​

During the years ended December 31, 2025, 2024 and 2023, the Company incurred interest and penalties of zero, respectively, related to these uncertain tax benefits.

 

As required by ASU 2023-09, the total cash paid for income taxes by U.S. federal, U.S. state and foreign jurisdictions for the year ended  December 31, 2025 is as follows:

 

   

Year ended December 31,

  
   

2025

  

U.S. federal

   $ 6,120  
         

U.S. state

   $ 1,347  
         

Foreign:

        

United Kingdom

     1,202  

Ireland

     648  

Canada

     558  

Other

     64  

Foreign Subtotal

   $ 2,472  
         

Total cash paid for income taxes (net of refunds)

   $ 9,939