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18. INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES |
18. | INCOME TAXES
There was no Federal income tax expense for the years ended December 31, 2020 and 2019 due to the Company’s net losses. Income tax expense represents minimum state taxes due. The blended Federal and State tax rate of 28.91% applies to loss before taxes. The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 21% to loss before taxes), as follows:
|  | Year ended December 31, |
|  | 2020 |  |  | 2019 |
Computed “expected” tax expense (benefit) |  | $ | (1,093,697 | ) |  | $ | (826,124 | )
State taxes, net of federal benefit |  |  | (407,798 | ) |  |  | (271,629 | )
Non-deductible stock options |  |  | (6,933 | ) |  |  | 2,700,494 |
Non-deductible items |  |  | 611 |  |  |  | 998 |
True-up to tax return |  |  | 683,476 |  |  |  | 5,073 |
Change in deferred tax asset valuation allowance |  |  | 829,285 |  |  |  | (1,605,712 | )
Income tax expense |  | $ | 4,944 |  |  | $ | 3,100 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities are as follows:
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  | $ |  |  |  | $ |  |
Reserve for bad debt |  |  | – |  |  |  | 680 |
Stock options |  |  | 574,365 |  |  |  | 760,763 |
Deferred Revenue |  |  | 31,070 |  |  |  | 24,077 |
Other |  |  | 86,457 |  |  |  | 59,947 |
Net operating loss carryforward |  |  | 10,012,021 |  |  |  | 8,996,569 |
Total gross deferred tax assets |  |  | 10,703,913 |  |  |  | 9,842,036 |
Less: Deferred tax asset valuation allowance |  |  | (10,656,461 | ) |  |  | (9,827,176 | )
Total net deferred tax assets |  |  | 47,452 |  |  |  | 14,860 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (47,452 | ) |  |  | (14,860 | )
Total deferred tax liabilities |  |  | (47,452 | ) |  |  | (14,860 | )
Total net deferred taxes |  | $ | – |  |  | $ | – |
As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established. The valuation allowance at December 31, 2020 was $10,656,461. The increase in the valuation allowance during 2020 was $829,285. At December 31, 2020, the Company has a net operating loss carry forward of $32,827,007, of which $25,107,807 is available to offset future net income through 2037. The net operating loss (“NOL”) expires during the years 2019 to 2037 and $11,721,225 may be carried forward indefinitely and limited to offsetting 80% of taxable income. The utilization of the net operating loss carryforwards is dependent upon the ability of the Company to generate sufficient taxable income during the carryforward period. In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred. No liability related to uncertain tax positions is recorded on the financial statements related to uncertain tax positions. There are no unrecognized tax benefits as of December 31, 2020. The Company does not expect that uncertain tax benefits will materially change in the next 12 months. The Company files U.S. federal, California, Illinois, New York, and Wisconsin State tax returns, and a New York City tax return. All tax returns will remain open for examination by the federal and state taxing authorities for three and four years, respectively, from the date of utilization of any net operating loss carryforwards. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law and GAAP requires recognition of the tax effects of new legislation during the reporting period that includes the enactment date. The CARES Act includes changes to the tax provisions that benefits business entities and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act. The tax relief measures for businesses in the CARES Act include a five-year net operating loss carryback for certain net operating losses, suspension of the annual deduction limitation of 80% of taxable income for certain net operating losses, changes in the deductibility of interest, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property. The CARES Act also provides other non-tax benefits to assist those impacted by the pandemic. The Company evaluated the impact of the CARES Act and determined that there is no material impact to the income tax provision for the year ended December 31, 2020. The Consolidated Appropriation Act (“CAA”) of 2021 was signed into law by the President on December 27, 2020, containing the most recent COVID-19 relief provisions as well as many tax provisions including renewals of several popular tax extenders. The Company evaluated the impact of the CAA and determined that there is no material impact to the income tax provision for the year ended December 31, 2020.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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