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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

NOTE G - INCOME TAXES

During the three-month period ended March 31, 2020, we generated a federal net operating loss (“NOL”) carryforward of $2.5 million and generated $522,000 of foreign NOL carryforwards. As of  March 31, 2020, we had consolidated income tax NOL carryforwards for federal tax purposes of approximately $182.4 million and net operating loss carryforwards for foreign income tax purposes of approximately $61.2 million. The federal NOL carryforwards from 2005 forward will expire in various years beginning in 2025 and ending through the year 2038.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to be recovered or settled. We have recorded a net deferred tax asset of $0 at March 31, 2020. As required by the Accounting for Income Taxes topic in the ASC, we have concluded it is more likely than not that those assets would not be realizable without the recovery and rights of ownership or salvage rights of high value shipwrecks or substantial profits from our mining operations and thus a valuation allowance has been recorded as of  March 31, 2020. There was no U.S. income tax expense for the three months ended March 31, 2020 due to the generation of net operating losses.

The increase in the valuation allowance as of March 31, 2020 is due to the generation of approximately $1.3 million in net operating loss year-to-date.

The change in the valuation allowance is as follows:

March 31, 2020		$	58,150,448
December 31, 2019			56,819,522
Change in valuation allowance		$	1,330,926

Our estimated annual effective tax rate as of  March 31, 2020 is 43.31% while our March 31, 2020 effective tax rate is 0.0% because of the full valuation allowance.

We have not recognized a material adjustment in the liability for unrecognized tax benefits and have not recorded any provisions for accrued interest and penalties related to uncertain tax positions. The earliest tax year still subject to examination by a major taxing jurisdiction is 2016.

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- References

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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

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