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Note 9 - Income Taxes | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
Note 9: |  | Income Taxes
Income tax provision (benefit) reported in the consolidated statements of operations is comprised of the following:
|  | December 31,
|  | 2016 |  | 2015
Current provision (benefit): |  |  |  |  |  |  |  |
Federal |  | $ | 22,800 |  |  | $ | (208,900 | )
State, net of state tax credits |  |  | 20,900 |  |  |  | (67,800 | )
Total current provision (benefit) |  |  | 43,700 |  |  |  | (276,700 | )
Deferred provision: |  |  |  |  |  |  |  |
Federal |  |  | 97,400 |  |  |  | 40,800 |
State |  |  | 23,300 |  |  |  | - |
Total deferred provision |  |  | 120,700 |  |  |  | 40,800 |
Total income tax provision (benefit) |  | $ | 164,400 |  |  | $ | (235,900 | )
The following are the components of the Company’s net deferred taxes for federal and state income taxes:
|  | December 31,
|  | 2016 |  | 2015
Deferred revenue |  | $ | 1,509,400 |  |  | $ | 1,988,200 |
Deferred franchise costs |  |  | (553,900 | ) |  |  | (664,000 | )
Allowance for doubtful accounts |  |  | 51,400 |  |  |  | 1,781,000 |
Accrued expenses |  |  | 57,400 |  |  |  | 74,900 |
Goodwill - Component 1 |  |  | (120,700 | ) |  |  | - |
Goodwill - Component 2 |  |  | 86,800 |  |  |  | 87,000 |
Restricted stock compensation |  |  | (30,800 | ) |  |  | (44,100 | )
Nonqualified stock options |  |  | 182,100 |  |  |  | 109,600 |
Deferred rent |  |  | 629,600 |  |  |  | 209,700 |
Lease abandonment |  |  | 108,900 |  |  |  | - |
Net operating loss carryforwards |  |  | 8,924,800 |  |  |  | 1,849,100 |
Tax credits |  |  | 14,000 |  |  |  | 14,200 |
Charitable contribution carryover |  |  | 6,500 |  |  |  | 1,300 |
Asset basis difference related to property and equipment |  |  | 630,900 |  |  |  | 167,500 |
|  |  | 11,496,400 |  |  |  | 5,574,400 |
Less valuation allowance |  |  | (11,617,100 | ) |  |  | (5,574,400 | )
Net non-current deferred tax liability |  | $ | (120,700 | ) |  | $ | - |
At December 31, 2016, the Company has federal and state net operating losses of approximately $22,613,000 and $24,948,000, respectively. These net operating losses are available to offset future taxable income and will begin to expire in 2035 for federal purposes and 2020 for state purposes. The following is a reconciliation of the statutory federal income tax rate applied to pre-tax accounting net income (loss), compared to the income tax provision (benefit) in the consolidated statement of operations:
|  | For the Years Ended December 31,
|  | 2016 |  | 2015
|  | Amount |  | Percent |  | Amount |  | Percent
Expected federal tax expense (benefit) |  | $ | (5,106,100 | ) |  |  | (34.00 | )% |  | $ | (3,071,300 | ) |  |  | (34.00 | )%
State tax provision, net of federal benefit |  |  | (735,500 | ) |  |  | (4.90 | ) |  |  | (387,500 | ) |  |  | (4.29 | )
Effect of increase in valuation allowance |  |  | 6,042,900 |  |  |  | 40.24 |  |  |  | 3,519,800 |  |  |  | 38.97 |
Permanent differences |  |  | 108,800 |  |  |  | 0.72 |  |  |  | (58,800 | ) |  |  | (0.65 | )
Uncertain tax positions |  |  | - |  |  |  | - |  |  |  | (46,500 | ) |  |  | (0.51 | )
Effect of changed state rates for deferred |  |  | - |  |  |  | - |  |  |  | (80,100 | ) |  |  | (0.89 | )
Other, net |  |  | (145,700 | ) |  |  | (0.97 | ) |  |  | (111,500 | ) |  |  | (1.23 | )
Provision (Benefit) |  | $ | 164,400 |  |  |  | 1.09 | % |  | $ | (235,900 | ) |  |  | (2.60 | )%
The state tax expense (benefit), penalties and interest stem from resolution of various voluntary disclosure agreements with multiple states where we had not yet been in compliance. In addition, we are responsible to pay certain minimum and franchise taxes to jurisdictions in which we do business. Changes in our income tax expense related primarily to changes in pretax losses during the year ended December 31, 2016, as compared to year ended December 31, 2015, and the effective rate was 1.1% and - 2.6%, respectively. The difference is due to a valuation allowance on the Company's deferred tax assets, and the impact of certain permanent differences on taxable income. For the year ended December 31, 2016 and 2015, the Company recorded a liability for income taxes for operations and uncertain tax positions of approximately $40,000 and $66,000, respectively, of which $27,000 and $33,000 respectively, represent penalties and interest and are recorded in the “other liabilities” section of the accompanying consolidated balance sheets. Interest and penalties associated with tax positions are recorded in the period assessed as general and administrative expenses. Management made a determination that the Company was not in compliance with several state and local tax jurisdictions in which the company was doing business. Accordingly, management undertook to analyze its tax exposures, both income and otherwise, with respect to jurisdictions in which compliance was deemed to be inadequate and the Company has entered into Voluntary Disclosure Agreements (VDAs) with the taxing authorities. The following table sets forth a reconciliation of the beginning and ending amount of uncertain tax positions during the tax years ended December 31, 2016 and 2015:
|  | 2016 |  | 2015
|  | Tax |  | Interest/ penalties |  | Tax |  | Interest/ penalties
Unrecognized tax benefit - January 1 |  | $ | 32,600 |  |  | $ | 33,000 |  |  | $ | 91,700 |  |  | $ | 30,000 |
Gross increases - tax positions in prior period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,000 |
Gross decreases - tax positions in prior period |  |  | (19,400 | ) |  |  | (6,200 | ) |  |  | (59,100 | ) |  |  | - |
Unrecognized tax benefit - December 31 |  | $ | 13,200 |  |  | $ | 26,800 |  |  | $ | 32,600 |  |  | $ | 33,000 |
Our tax returns for tax years subject to examination by tax authorities include 2012 through the current period for state and 2013 through the current period for federal reporting purposes.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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