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Income taxes | 12 Months Ended
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Dec. 31, 2020
Income taxes |
12. Income taxes | The provision for income taxes differs from the amount obtained by applying the applicable Federal income tax rate of 21% at year-ends 2020 and 2019 to income before income taxes. The difference relates to the following items:
|  | 2020 |  |  | 2019 |
Statutory tax rate |  | 21% |  |  | 21% |
Expected tax benefit |  | $ | (1,232,000 | ) |  | $ | (380,000 | )
Nondeductible expenses |  |  | — |  |  |  | — |
Increase in valuation allowance |  |  | 1,232,000 |  |  |  | 380,000 |
Tax provision (benefit) as reported |  | $ | — |  |  | $ | — |
The components of deferred income taxes at December 31, are as follows: |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |
Loss carry-forwards |  | $ | 4,071,054 |  |  | $ | 2,594,008 |
Depreciation, depletion and impairment |  |  | 2,696,706 |  |  |  | 413,835 |
Unrecognized losses on derivatives |  |  | 1 ,207 |  |  |  | 46,963 |
Total deferred tax assets |  |  | 6,768,967 |  |  |  | 3,054,806 |
Valuation allowance |  |  | (6,768,967 | ) |  |  | (3,054,806 | )
Net deferred taxes |  | $ | — |  |  | $ | — |
At December 31, 2020, the Company has accumulated net operating loss carryforwards totaling approximately $19.4 million which begin to expire if not utilized starting in 2021. Utilization of the Company's loss carryforwards is dependent on realizing taxable income. The Company recorded a valuation allowance as of December 31, 2020 and 2019 due to uncertainty related to its ability to utilize some of its deferred income tax assets, primarily consisting of net operating loss carryforwards before they expire. The Company is no longer subject to income tax examinations by tax authorities for years before 2017. The Company is not currently the subject of any income tax examinations by any tax authorities. Based upon a review of its income tax filing positions, the Company believes that its positions would be sustained upon an audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. The Company recognizes interest related to income taxes as interest expense and penalties as operating expenses.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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