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Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

(5) Income Taxes

Since inception, the Company has incurred losses from operations and as a result has not recorded income tax expense. Benefits related to net operating loss carry-forwards and deferred items have been fully reserved because it is not more likely than not that the Company will achieve profitable operations. The difference between the total income taxes at the federal statutory rate for each of the years ended December 31, 2019 and 2018 and the fact that no income tax benefit was recorded in each of these years are attributable to the change in the valuation allowance recorded in each year.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2019 and 2018 are presented below:

		2019				2018
Deferred tax assets:
Depreciation		$	102,000			$	87,000
Allowance for bad debts			243,000				234,000
Net operating loss carry-forwards			15,314,000				15,528,000
Stock option expense			354,000				257,000
Research and other credits			1,099,000				1,161,000
Other temporary differences			15,000				15,000
Total gross deferred tax assets			17,127,000				17,282,000
Less valuation allowance			(17,127,000	)			(17,282,000	)
		$	-			$	-

The reconciliation of the income tax expense (benefit) computed at the Federal statutory tax rates to income tax expense (benefit) is as follows:

		2019				2018
Income tax provision at federal statutory rate		$	(800,000	)		$	(564,100	)
Permanent differences			136,900				73,000
Credits			(5,000	)			(5,000	)
Expired carryforwards and other			823,100				640,000
Valuation allowance			(155,000	)			(143,900	)
Total income tax provision		$	-			$	-

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the period in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon its historical operating losses, utilization of deferred tax assets cannot currently be determined. Accordingly, the Company has recorded a full valuation allowance against the deferred tax assets due to the uncertainty regarding the future utilization of the deferred tax assets for all periods presented.

At December 31, 2019, the Company had a net operating loss carry-forward for federal income tax purposes of approximately $71,452,000, of which a total of $66,952,000 will expire in varying amounts from 2020 through 2038. Research and other credit carry-forwards of approximately $1,099,000 are available to the Company to reduce income taxes payable in future years principally through 2038. The Company’s ability to utilize its net operating loss carryforwards and its current year tax credits in future periods could be subject to the 382 limitation. The Company will need to complete an analysis to determine whether its net operating losses are subject to the 382 limitation.