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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

Note 11. Income Taxes

 

Income tax provision (benefit) for the years ended December 31, 2022 and 2021 is summarized below:

 

   2022   2021 
Current:          
Federal  $-   $- 
State   -    - 
Total   -    - 
Deferred:          
Federal   (956,000)   (1,002,000)
State   (323,000)   (322,000)
Change in valuation allowance   1,279,000    1,324,000 
Total   -    - 
Provision for income taxes  $-   $- 

 

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:

 

   2022   2021 
Statutory federal income tax rate   21%   21%
State tax   7    7 
Permanent differences   -    (15)
Change in valuation allowance   (28)   (13)
Total Income tax   -%   -%

 

Components of the net deferred income tax assets at December 31, 2022 and 2021 were as follows:

 

   2022   2021 
Net operating loss carryover  $13,948,000   $12,669,000 
Valuation allowance   (13,948,000)   (12,669,000)
Deferred tax assets, net  $-   $- 

 

 

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 $13,948,000 and $12,669,000 allowance at December 31, 2022 and 2021, 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 $1,279,000 resulting for current year tax losses.

 

As of December 31, 2022, the Company has a net operating loss carry forward to offset future taxable income of approximately $49,843,000, $28,482,000 of which begins to expire in 2033. Net operating loss carry forwards of $21,361,000 may be carried forward indefinitely. The Company may have experienced an ownership change that could limit its ability to utilize its operating loss carryforward to offset taxable income in future years. An analysis will be required to determine whether such change has occurred, the outcome of which could impact the Company’s operating results and cash flow if and when it achieves profitability in taxable jurisdictions.