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Income Taxes
 9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes
NOTE G - INCOME TAXES
During the nine-month period ended September 30, 2021, we generated a federal net operating loss (“NOL”) carryforward of $11.6 million. As of September 30, 2021, we had consolidated income tax NOL carryforwards for federal tax purposes of approximately $208 million and net operating loss carryforwards for foreign income tax purposes of approximately $66.8 million.
The federal NOL carryforwards from 2005 - 2017
will expire in various years beginning in 2025 and ending through the year 2038
. Losses generated in 2018 and forward will not expire.
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 September 30, 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 September 30, 2021. There was no U.S. income tax expense for the
nine
months ended September 30, 2021 due to the generation of net operating losses.
The increase in the valuation allowance as of September 30, 2021 is due to the generation of approximately $11.6 million in net operating loss
year-to-date.
The change in the valuation allowance is as follows:
 
September 30,
 
2021
    $ 69,660,261  
December 31, 2020
      68,859,984  
    
 
 
  
Change in valuation allowance
    $ 800,277  
    
 
 
  
Our estimated annual effective tax rate before the valuation allowance as of September 30, 2021 is 7.976% while our September 30, 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.