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INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11 – INCOME TAXES

 

As of December 31, 2021, the Company has approximately $66.6 million of operating loss carryforwards for federal income tax reporting purposes that may be applied against future taxable income. Portions of the net operating loss carryforwards will expire in 2022 if not utilized prior, and will continue to expire during various years through 2037. There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382.

 

The valuation allowance overall increased by approximately $20.8 million and $1.3 million during the years ended 2021 and 2020, respectively. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

 

The income tax provision charged to continuing operations for the years ended December 31, 2021 and 2020 was as follows:

   2021   2020 
   December 31, 
   2021   2020 
Current:          
U.S. federal  $-   $152,100 
State and local   7,700    40,400 
Total   7,700    192,500 
Deferred:          
U.S. federal   -    (70,000)
State and local   -    - 
Total   -    (70,000)
Provision for income taxes  $7,700   $122,500 

 

 

The provision for income taxes differs from the expected amount of income tax expense (benefit) determined by applying a combined U.S. federal and state (Puerto Rico) income tax rate of 25% to pretax income (loss) for the years ended December 31, 2021 and 2020 as follows:

 

   2021   2020 
   December 31, 
   2021   2020 
Computed “expected” tax expense (benefit)  $(12,684,000)  $(12,684,000)
Increase (decrease) in income taxes resulting from:          
State taxes   (618,000)   - 
Permanent differences   (52,000)   7,765,000 
Apportionment of Puerto Rico income   76,000    3,607,000 
Nondeductible expenses   -    140,000 
Change in valuation allowance   13,192,000    1,269,000 
Other   93,700    25,500 
Provision for income taxes  $7,700   $122,500 

 

Net deferred tax liabilities consist of the following components as of December 31, 2021 and 2020:

 

   2021   2020 
   December 31, 
   2021   2020 
Deferred tax liability:          
Other  $-   $- 
    -    - 
Deferred tax assets:          
Stock-based compensation   6,899,000    716,000 
Temporary differences   1,201,000    113,000 
Net operating loss carryforwards   15,673,000    2,151,000 
Total   23,773,000    2,980,000 
Less valuation allowance   (23,773,000)   (2,980,000)
Total  $-   $-