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

Note 12 – Income Taxes

 

The current income tax provision and deferred income tax provision for the years ended December 31, 2021 and 2020 were comprised for the following:

  

   2021   2020 
           
Expected tax benefit  $(4,802,660)  $(4,343,542)
Nondeductible expenses   3,503,996    0 
Increase in valuation allowance   1,298,664    4,343,542 
Tax provision (benefit) as reported  $—   $— 

 

 

At December 31, 2021, the Company had net operating loss carryforwards of approximately $20.7 million for federal income tax purposes available to offset future taxable income, as limited by the applicable provisions, which expire at various dates beginning in 2022 for the federal net operating loss carryforwards. In accordance with Section 382 of the Internal Revenue Code, the usage of the Company's net operating loss carryforwards may be limited in the event of a change in ownership. A full Section 382 analysis has not been prepared and NOLs could be subject to limitation under Section 382.

 

Deferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax basis of assets and liabilities. The Company’s nettax position as of December 31, 2021 and 2020 is as follows :

 

   2021   2020 
         
Deferred tax assets (liabilities):          
Loss carry-forwards  $5,341,256  $4,071,054 
Depreciation, depletion and impairment   1,239,723    2,696,706 
Right of use assets   8,036    — 
Stock option grants   796,188    — 
Other property and equipment   (459,745)   — 
Unrecognized losses on derivatives   27,210    1,207 
       Total deferred tax assets   6,952,668    6,768,967 
           
Valuation allowance   (6,952,668)   (6,768,967)
Net deferred taxes  $—   $— 

 

Reconciliations of the tax expense (benefit) computed at the statutory federal rate to the Company’s total income tax benefit for the years ended December 31, 2021 and 2020 are as follows:

 

  2021   2020 
    $    %    $    % 
Pretax GAAP Loss   (18,614,962)   —    (16,835,434)   — 
Pretax GAAP Loss at Statutory Rate   (3,909,142)   21.0%    (3,535,441)   21.0% 
State Taxes   (893,518)   4.8%    (808,101)   4.8% 
Nondeductible Expenses   3,503,996    -18.8%    —    0% 
Valuation Allowance   1,298,664    -7.0%    4,343,542    -25.8% 
Effective   —    0%    —   0% 

 

Utilization of the Company’s loss carryforwards is dependent on realizing taxable income. The Company recorded valuation allowances as of December 31, 2021 and 2020 due to the uncertainty related to its ability to utilize some of its deferred income tax assets, primarily consisting of net operating loss carryforwards prior to expiration.

 

The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would likely than not would be sustained by examination. Therefore, at December 31, 2021, the Company has not established any reserves for, nor recorded any unrecognized benefits related to uncertain tax positions.