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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance for the amount of deferred tax assets that, based on available evidence, are more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of December 31, 2019 and 2018, and we have recorded a valuation allowance of $12,452,000 and $12,202,000, respectively, against deferred tax assets in excess of deferred tax liabilities in the accompanying consolidated financial statements. The components of net deferred taxes are as follows:
|  | As of December 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Net operating loss |  | $ | 4,616,000 |  |  | $ | 5,095,000 |
Depreciation and amortization |  |  | 5,002,000 |  |  |  | 4,449,000 |
Stock-based compensation |  |  | 3,113,000 |  |  |  | 2,840,000 |
Capitalized software costs |  |  | (561,000 | ) |  |  | (522,000 | )
Deferred lease liability |  |  | 45,000 |  |  |  | 53,000 |
Allowance for doubtful accounts |  |  | 206,000 |  |  |  | 251,000 |
Other |  |  | 31,000 |  |  |  | 36,000 |
Total deferred tax assets, net |  |  | 12,452,000 |  |  |  | 12,202,000 |
Less: valuation allowance |  |  | (12,452,000 | ) |  |  | (12,202,000 | )
Net deferred taxes |  | $ | — |  |  | $ | — |
Our statutory income tax rate is expected to be approximately 26.8%. We had state income tax expense of $219,082 for the year ended December 31, 2019, which is attributable to state obligations for states with no net operating loss carryforwards, and the continued reserve against the benefit of the net operating losses at the federal level. The provision for income taxes consisted of the following:
|  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |
Current |  | $ | 219,082 |  |  | $ | — |
Deferred |  |  | — |  |  |  | — |
Total |  | $ | 219,082 |  |  | $ | — |
The reconciliation between the income tax expense (benefit) calculated by applying statutory rates to net loss and the income tax expense reported in the accompanying consolidated financial statements is as follows:
|  | Years Ended December 31, |
|  | 2019 |  |  | 2018 |
U.S. federal statutory rate applied to pretax income (loss) |  | $ | 34,000 |  |  | $ | (512,000 | )
State taxes, net of federal benefit |  |  | 165,082 |  |  |  | (146,000 | )
Permanent differences |  |  | 11,000 |  |  |  | 7,000 |
Benefit of federal operating loss carryforwards |  |  | (381,000 | ) |  |  | (170,000 | )
Cumulative adjustment to deferred taxes |  |  | — |  |  |  | 612,000 |
Change in state tax rates and other |  |  | 140,000 |  |  |  | 157,000 |
Change in valuation allowance |  |  | 250,000 |  |  |  | 52,000 |
|  | $ | 219,082 |  |  | $ | — |
As of December 31, 2019 and 2018, we had federal income tax net operating loss carryforwards of approximately $17,200,000 and $18,900,000, respectively, which expire at various dates ranging from 2031 through 2037. We are subject to limitations existing under Internal Revenue Code Section 382 (Change of Control) relating to the availability of the operating loss. Such limitation of the net operating losses may have occurred, which we have not fully analyzed at this time as we have fully reserved the deferred tax asset. As of December 31, 2019 and 2018, we did not recognize any assets or liabilities relative to uncertain tax positions, nor do we anticipate any significant unrecognized tax benefits will be recorded during 2020. It is our policy to classify interest and penalties on income taxes as interest expense or penalties expense, should any be incurred. Tax positions are positions taken in a previously filed tax return or positions expected to be taken in a future tax return that are reflected in measuring current or deferred income tax assets and liabilities reported in the financial statements. Tax positions include the following:
| • | an allocation or shift of income between taxing jurisdictions;
| • | the characterization of income or a decision to exclude reportable taxable income in a tax return; or
| • | a decision to classify a transaction, entity, or other position in a tax return as tax exempt.
We are potentially subject to tax audits for federal and state tax returns for tax years ended 2016 to 2019. Tax audits by their very nature are often complex and can require several years to complete.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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