XML 28 R16.htm IDEA: XBRL DOCUMENT v3.22.0.1
Note 10 - Income Taxes
 12 Months Ended
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