XML 71 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Provision for Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Provision for Income Taxes
17. Provision For Income Taxes

 

The Company files income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. For the twelve months ended December 31, 2020, and 2019, we have recognized the minimum amount of state income tax as required by the states in which we are required to file taxes. We are not currently subject to further federal or state tax since we have incurred losses since our inception.

 

Income tax benefit consists of the following Federal, deferred components for the twelve months ended December 31, 2020 and 2019:

 

    December 31, 2020     December 31, 2019  
Benefit of net operating losses   $ (72,541 )   $ (524,000 ) 
Other timing differences     (91,770 )     76,070  
Change in valuation allowance, including $188,000 reduction in valuation allowance due to purchased deferred tax liability     (23,989 )     447,930  
Tax benefit   $ (188,300 )   $ -  

 

A reconciliation is provided below of the U.S. Federal income tax expense at a statutory rate of 21% for the twelve months ended December 31, 2020 and 2019:

 

    December 31, 2020     December 31, 2019  
U.S. statutory rate     21 %     21 % 
U.S. Federal income tax at statutory rate   $ (501,690 )   $ (447,930 )
Increase (decrease) in income taxes due to:                
Non-deductible earnout expense     299,040       -  
Non-deductible goodwill amortization     33,390       -  
Other differences     4,949       -  
Benefit of acquisition-date purchased deferred tax liability     (188,300 )     -  
Other change in valuation allowance     164,311       447,930  
Income tax benefit   $ (188,300 )   $ -  

 

The approximate tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

 

    December 31, 2020     December 31, 2019  
Deferred tax assets                
Reserves and accruals not currently deductible for tax purposes   $ 51,000     $ 35,000  
Amortizable assets     72,000       -  
Net operating loss carryforwards     4,020,000       3,987,000  
      4,143,000       4,022,000  
Deferred tax liabilities                
Property and equipment     (143,000 )     -  
Net Deferred tax assets     4,000,000       4,022,000  
Valuation allowance     (4,000,000 )     (4,022,000 )
    $ -     $ -  

 

As of December 31, 2020 and 2019, we had federal net operating loss carry forwards of approximately $19,129,000 and $18,986,000, respectively, which can be used to offset future federal income tax. The federal and state net operating loss carry forwards expire at various dates through 2040. We recorded a valuation allowance against all of our deferred tax assets as of both December 31, 2020, and December 31, 2019. We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. However, the exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.