XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.2
Provision For Income Taxes
 9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Provision For Income Taxes

17. Provision For Income Taxes

 

We file federal and various state income tax returns in the U.S. For the three and nine months ended September 30, 2021 and 2020, 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 any other federal or state taxes because we have incurred losses since our inception.

 

Income tax benefit consists of the following federal, deferred components for the nine months ended September 30, 2021 and 2020:

 

   Nine months ended
September 30, 2021		   Nine months ended
September 30, 2020		 
Benefit of net operating losses  $81,186   $(85,536)
Other timing differences   61,809    (85,209)
Change in valuation allowance, including $188,000 reduction in valuation allowance due to purchased deferred tax liability in 2020   (142,995)   17,555 
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 nine months ended September 30, 2021 and 2020:

 

   Nine months ended
September 30, 2021		   Nine months ended
September 30, 2020		 
U.S. statutory rate   21%   21%
U.S. Federal income tax at statutory rate  $275,448   $(201,810)
Increase (decrease) in income taxes due to:          
Non-taxable PPP loan and accrued interest recovery   (177,467)   - 
Non-deductible earnout expense   14,690    - 
Non-deductible goodwill amortization   29,968    22,890 
Other differences   356    6,840 
Benefit of acquisition-date purchased deferred tax liability   -    (188,300)
Other change in valuation allowance   (142,995)   171,780 
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:

 

   September 30, 2021   December 31, 2020 
Deferred tax assets          
Reserves and accruals not currently deductible for tax purposes  $48,000   $51,000 
Amortizable assets   67,000    72,000 
Net operating loss carryforwards   3,939,000    4,020,000 
 Deferred tax assets   4,054,000    4,143,000 
Deferred tax liabilities          
Property and equipment   (198,000)   (143,000)
Net Deferred tax assets   3,856,000    4,000,000 
Valuation allowance   (3,856,000)   (4,000,000)
 Deferred tax assets and liabilities  $-   $- 

 

As of September 30, 2021 and December 31, 2020, we had federal net operating loss carry forwards of approximately $18,742,533 and $19,196,000, 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 2039 for pre-2020 losses. The operating losses during and after 2020 do not expire. We recorded a valuation allowance against all of our deferred tax assets as of both September 30, 2021 and December 31, 2020. 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.