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INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 12 – INCOME TAXES

 

As of December 31, 2023, the Company has approximately $100.8 million of operating loss carryforwards for federal income tax reporting purposes that may be applied against future taxable income. All remaining net operating loss carryforwards were generated after 2017 and can be carried forward indefinitely. 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 Internal Revenue Code Section 382.

 

The valuation allowance overall increased by approximately $5.4 million and $11.8 million during the years ended December 31, 2023 and 2022, 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, 2023 and 2022 was as follows:

 

           
   December 31, 
   2023   2022 
Current:          
U.S. federal  $-   $- 
State and local   111,000    6,700 
Foreign   317,000    - 
Total   428,000    6,700 
Deferred:          
U.S. federal   1,470,000    1,719,000 
State and local   (1,470,000)   (1,365,000)
Foreign   -    - 
Total   -    354,000 
Provision for income taxes  $428,000   $360,700 

 

 

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, 2023 and 2022 as follows:

  

           
   December 31, 
    2023    2022 
Computed “expected” tax expense (benefit)  $(1,951,000)  $(9,474,000)
Increase (decrease) in income taxes resulting from:          
State taxes   (440,000)   (714,000)
Permanent differences   71,000    730,000 
Apportionment of Puerto Rico income   (133,000)   (108,000)
Nondeductible expenses   -    - 
GILTI, net of 250 deduction   1,855,000    - 
Dividends received deduction   (1,224,000)   - 
Change in valuation allowance   4,327,000    9,973,000 
Rate differential   (2,125,000)   - 
Other   48,000    (46,300)
Provision for income taxes  $428,000   $360,700 

 

Net deferred tax liabilities consist of the following components as of December 31, 2023 and 2022:

  

   2023   2022 
   December 31, 
   2023   2022 
Deferred tax liability:          
Other  $-   $- 
Deferred tax liability, Total   -    - 
Deferred tax assets:          
Stock-based compensation   15,100,000    11,646,000 
Sec 174 – software development   298,000    142,000 
Temporary differences   2,465,000    2,389,000 
Net operating loss carryforwards   23,057,000    21,382,000 
Deferred tax assets, Gross   40,920,000    35,559,000 
Less valuation allowance   (40,920,000)   (35,559,000)
Deferred tax assets, Net  $-   $-