Income Taxes

3 Months Ended

Mar. 31, 2021

NOTE G - INCOME TAXES

During the three-month period ended March 31, 2021, we generated a federal net operating loss (“NOL”) carryforward of $4.2 million and generated $1.4 million of foreign NOL carryforwards. As of March 31, 2021, we had consolidated income tax NOL carryforwards for federal tax purposes of approximately $201.1 million and net operating loss carryforwards for foreign income tax purposes of approximately $63.2 million.

The federal NOL carryforwards from 2005 thru 2017 will expire in various years beginning in

2025 and ending through the year 2036.

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, 2021. 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, 2021. There was no U.S. income tax expense for the three months ended March 31, 2021 due to the generation of net operating losses.

The increase in the valuation allowance as of March 31, 2021 is due to the generation of approximately $297,142 in net operating loss

year-to-date.

The change in the valuation allowance is as follows:


March 31, 2021	$	69,157,126
December 31, 2020		68,859,984
Change in valuation allowance	$	297,142

Our estimated annual effective tax rate before the valuation allowance as of March 31, 2021 is 7.99% while our March 31, 2021 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 2017.

- 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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