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13. Income Tax

12 Months Ended

Dec. 31, 2020

The provision for income taxes is comprised of the following:

	December 31, 2020			December 31, 2019
Current
Federal	$	1,812,710		$	3,551,418
State		696,154			996,510
Deferred
Federal		(1,246,828	)		(1,113,042	)
State		(520,999	)		46,110
Change in valuation allowance		-			-
Provision for income taxes	$	741,038		$	3,480,996

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes are as follows:

	December 31, 2020			December 31, 2019
Deferred Tax Assets and Liabilities
Workers' compensation claims liability	$	1,131,695		$	947,023
Depreciation/amortization		205,987			279,990
Bad debt reserve		18,984			41,436
Accrued vacation		33,956			37,771
Cash to Accrual - 481 Adjustment		(1,888,302	)		(3,000,216	)
Impairment of notes receivable		394,674			-
Stock based compensation		182,385			5,550
Total deferred tax asset	$	79,379		$	(1,688,446	)

Management estimates that our effective tax rates was approximately 12.1% for 2020. The items accounting for the difference between income taxes computed at the statutory federal income tax rate and the income taxes reported on the statements of income are as follows:

	December 31, 2020					December 31, 2019
Income tax expense based on statutory rate	$	1,281,095		21.0	%	$	624,860		21.0	%
Permanent differences		4,233		0.1	%		(789,810	)	(26.5	)%
State income taxes expense net of federal taxes		138,375		2.3	%		820,698		27.6	%
WOTC		(712,891	)	(11.7	)%		(498,000	)	(16.7	)%
HQ Conversion to C Corp		-		0.0	%		3,320,594		111.6	%
Other		30,226		0.5	%		2,654		0.1	%
Total taxes on income	$	741,038		12.1	%	$	3,480,996		117.0	%

- 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.

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