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Note 10 - Income Taxes | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 10. Income Taxes Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax asset are as follows at December 31:
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 5,942,000 |  |  | $ | 8,277,000 |
Depreciation and amortization |  |  | 999,000 |  |  |  | 827,000 |
Non-cash compensation |  |  | (326,000 | ) |  |  | (225,000 | )
Other |  |  | 101,000 |  |  |  | 49,000 |
Valuation Allowance |  |  | (5,212,000 | ) |  |  | (7,534,000 | )
Deferred tax asset |  | $ | 1,504,000 |  |  | $ | 1,394,000 |
Management has reviewed its net deferred asset position, and due to the history of operating losses has determined that the application of a valuation allowance at December 31, 2021 and 2020 is warranted. If applicable, the Company would recognize interest expense and penalties related to uncertain tax positions in interest expense. As of December 31, 2021, the Company had not accrued any interest or penalties related to uncertain tax provisions. The Company has net operating loss carryforwards for tax purposes of approximately $29.5 million. Net operating loss carryforwards prior to 2017 are available to offset taxable income of future periods and expire 20 years after the loss was generated. The Net operating loss carryforward that expired in 2021 was in the amount of $10.7 million. The schedule below outlines when our pre-2017 net operating losses were generated and the year they may expire.
Tax Year End |  | NOL |  |  | Expiration |
2002 |  | $ | 9,109,774 |  |  |  | 2022 |
2004 |  |  | 1,621,096 |  |  |  | 2024 |
2005 |  |  | 1,788,157 |  |  |  | 2025 |
2006 |  |  | 1,350,961 |  |  |  | 2026 |
2007 |  |  | 1,740,724 |  |  |  | 2027 |
2008 |  |  | 918,960 |  |  |  | 2028 |
2009 |  |  | 835,322 |  |  |  | 2029 |
2010 |  |  | 429,827 |  |  |  | 2030 |
2013 |  |  | 504,862 |  |  |  | 2033 |
2016 |  |  | 474,465 |  |  |  | 2036 |
2017 |  |  | 1,267,336 |  |  |  | 2037 |
Total |  | $ | 20,041,484 |  |  |  |  |
Effective for tax years ending in 2018 or later, net operating losses cannot be carried back but can be carried forward to future tax years indefinitely, subject to annual limitations for utilization. Net operating losses generated in 2018 and later total $9,413,692. The below table outlines our net operating losses generated in 2018 and after.
Tax Year End |  | NOL |
2018 |  | $ | 4,410,916 |
2019 |  |  | 2,730,461 |
2020 |  |  | 2,272,315 |
Total |  | $ | 9,413,692 |
Total loss carryforwards |  | $ | 29,455,176 |
The tax provision for federal and state income tax is as follows for the years ended December 31:
|  | 2021 |  |  | 2020 |
Current provision: |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | (94,948 | )
State |  |  | 279,861 |  |  |  | 118,057 |
|  |  | 279,861 |  |  |  | 23,109 |
Deferred provision: |  |  |  |  |  |  |  |
Federal expense (benefit) |  |  | (110,000 | ) |  |  | — |
Expense for income taxes |  | $ | 169,861 |  |  | $ | 23,109 |
The reconciliation of federal income tax computed at the U.S. federal statutory tax rates to total income tax expense is as follows for the years ended December 31:
|  | 2021 |  |  | 2020 |
Income tax (benefit) at 21% |  | $ | (67,543 | ) |  | $ | (610,000 | )
Change in valuation allowance |  |  | (2,322,000 | ) |  |  | (2,470,000 | )
Permanent and other differences |  |  | 2,389,543 |  |  |  | 3,080,000 |
Federal income tax (benefit) |  |  | (110,000 | ) |  |  | (94,948) |
State taxes |  |  | 279,861 |  |  |  | 118,057 |
Income tax expense |  | $ | 169,861 |  |  | $ | 23,109 |

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