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Note 12 - Income Tax
 12 Months Ended
Dec. 31, 2021
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 12 – Income Tax

 

The provision for income taxes is comprised of the following:

 

  

December 31,

  

December 31,

 
  

2021

  

2020

 

Current

        

Federal

 $2,032,751  $1,812,710 

State

  971,936   696,154 

Deferred

        

Federal

  (2,045,199)  (1,246,828)

State

  (321,424)  (520,998)

Provision for income taxes

 $638,064  $741,038 

 

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,

  

December 31,

 
  

2021

  

2020

 

Deferred tax assets

        

Workers' compensation claims liability

 $1,517,396  $1,131,695 

Depreciation/amortization

  -   205,987 

Bad debt reserve

  6,385   18,984 

Accrued vacation

  43,854   33,956 

Impairment of notes receivable

  463,949   394,674 

Stock based compensation

  144,666   182,385 

Accrued compensation

  261,417   - 

Net operating loss carryforward

  228,289   - 

Total deferred tax asset

  2,665,956   1,967,681 

Deferred tax liabilities

        

Depreciation/amortization

  (2,208,041)  - 

Cash to Accrual - 481 Adjustment

  (930,861)  (1,888,302)

Total deferred tax liabilities

  (3,138,902)  (1,888,302)

Total deferred taxes, net

 $(472,946) $79,379 

 

At December 31, 2021, the Company has a federal net operating loss carry-forward of approximately $860,000 available to offset future federal taxable income. The federal net operating loss may be carried forward indefinitely, however, utilization of future net operating losses may be limited due to ownership changes under applicable sections of the Internal Revenue Code.

 

Management estimates that our effective tax rates was approximately 5.1% for 2021. 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, 2021

  

December 31, 2020

 

Income tax expense based on statutory rate

 $2,622,480   21.0% $1,281,095   21.0%

Bargain purchase gain

  (1,180,512)  (9.5)%  4,233   0.1%

Non-deductible executive compensation

  203,597   1.6%  -   0.0%

Stock based compensation

  (154,423)  (1.2)%  -   0.0%

State income taxes expense net of federal taxes

  446,422   3.6%  138,375   2.3%

WOTC

  (1,204,581)  (9.6)%  (712,891)  (11.7)%

Other

  (94,919)  (0.8)%  30,226   (0.5)%

Total taxes on income

 $638,064   5.1% $741,038   11.2%

 

U.S. federal income tax returns after 2017 remain open to examination. Generally, state income tax returns after 2016 remain open to examination. No income tax returns are currently under examination. As of December 31, 2021, and December 31, 2020, the Company does not have any unrecognized tax benefits, and continues to monitor its current and prior tax positions for any changes.