Note 6 - Income Taxes |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2026 | |||
| Notes to Financial Statements | |||
| Income Tax Disclosure [Text Block] |
Our effective tax rate for the three-month periods ended March 31, 2026 and 2025 was 29.0% and 23.2%, respectively. The period-over-period change was primarily attributable to the geographic mix of our operating results and other income recognized on nontaxable refundable tax credits under the 45X Advanced Manufacturing Production Credit.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States which includes a broad range of tax provisions affecting businesses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has included the estimated impacts of the bill in the consolidated financial statements for the three-month period ended March 31, 2026.
As of December 31, 2025, our federal net operating loss (“NOL”) carryforwards, state net operating loss carryforwards, and federal general business tax credit carryforwards were $8,800, $5,100 and $3,400, respectively. Our domestic net operating loss carryforwards begin to expire in 2031. Our federal general business tax credit carryforwards begin to expire in 2028. As of March 31, 2026, management has concluded it is more likely than not that these domestic NOL and credit carryforwards will be fully utilized.
As of March 31, 2026, for certain past operations in the U.K., we continue to report a valuation allowance for NOL carryforwards of approximately $10,000, nearly all of which can be carried forward indefinitely. Utilization of the net operating losses may be limited due to the change in the past U.K. operation and cannot currently be used to reduce taxable income at our other U.K. subsidiary, Accutronics Ltd. There are no other deferred tax assets related to the past U.K. operations.
As of March 31, 2026, we have recognized a valuation allowance against our other foreign deferred tax assets, as realization is considered to be more likely than not.
As of March 31, 2026, the Company maintains its assertion that all foreign earnings will be indefinitely reinvested in those operations, other than earnings generated in the U.K.
There were unrecognized tax benefits related to uncertain tax positions at March 31, 2026 and December 31, 2025.
As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for 2022 thru 2024 remain subject to IRS examination. Our U.S. tax matters for 2005-2007, 2009, and -2015 also remain subject to IRS examination due to the remaining availability of net operating loss carryforwards generated in those years. Our U.S. tax matters for thru 2024 remain subject to examination by various state and local tax jurisdictions. Our tax matters for the years thru 2024 remain subject to examination by the respective foreign tax jurisdiction authorities. |