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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes

Note 12. Income Taxes

 

Income tax provision (benefit) for the years ended December 31, 2020 and 2019 is summarized below:

 

    2020     2019  
Current:                
Federal   $ -     $ -  
State     -       -  
Total current     -       -  
Deferred:                
Federal     (715,000 )     (937,500 )
State     (235,000 )     (1,488,500 )
Total deferred     (950,000 )     (2,426,000 )
Change in valuation allowance   $ 950,000     $ 2,426,000  

 

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:

 

    2020     2019  
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     (25.4 )%     (21.8 )%
      - %     - %

 

Components of the net deferred income tax assets at December 31, 2020 and 2019 were as follows:

 

    2020     2019  
Net operating loss carryover   $ 11,345,000     $ 10,395,000  
Valuation allowance     (11,345,000 )     (10,395,000 )
    $ -     $ -  

 

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 $11,345,000 and $10,395,000 allowance at December 31, 2020 and 2019, 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 $950,000.

 

As of December 31, 2020, we have a net operating loss carry forward of approximately $40,664,400. 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  

 

The 2020 and 2019 net operating loss carry forward of $3,404,600 and $4,464,500 does not expire under the Tax Cut and Job Act of 2017.