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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Note 11. Income Taxes

Income tax provision (benefit) for the years ended December 31, 2019 and 2018 is summarized below:

		2019				2018
Current:
Federal		$	-			$	-
State			-				-
Total current			-				-
Deferred:
Federal			(937,500	)			(922,100	)
State			(1,488,500	)			(144,700	)
Total deferred			(2,426,000	)			(1,066,800	)
Change in valuation allowance		$	2,426,000			$	1,066,800

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income taxes. The sources and tax effect of the differences are as follows:

		2019				2018
Income tax provision at the federal statutory rate			21.0	%			21.0	%
State income taxes, net of federal benefit			6.9	%			3.3	%
Permanent Difference			(2.5	%)			(2.5	%)
Effect of rate change			-	%			-	%
Effect of change in valuation allowance			(21.8	%)			(21.8	)%
			-	%			-	%

Components of the net deferred income tax assets at December 31, 2019 and 2018 were as follows:

		2019				2018
Net operating loss carryover		$	10,395,000			$	7,969,000
Valuation allowance			(10,395,000	)			(7,969,000	)
		$	-			$	-

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive and negative, management has determined that a $10,395,000 and $7,969,000 allowance at December 31, 2019 and 2018, respectively, is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The increase in the valuation allowance for the current period is $2,426,000.

As of December 31, 2019, we have a net operating loss carry forward of approximately $37,259,800. The loss will be available to offset future taxable income. If not used, this carry forward will expire as follows:

2030		$	1,000
2031		$	63,800
2032		$	345,900
2033		$	1,840,300
2034		$	2,324,100
2035		$	2,987,300
2036		$	5,061,700
2037		$	8,464,700
2038		$	7,315,400
2039		$	4,391,100
2040		$	4,464,500

As of December 31, 2019, we did not have any significant unrecognized uncertain tax positions. The 2019 net operating loss carry forward of $4,464,500 does not expire under the Tax Cut and Job Act of 2017.