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INCOME TAXES | 12 Months Ended
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Dec. 31, 2020
INCOME TAXES |
INCOME TAXES | 11. INCOME TAXES The provision (benefit) for income taxes consists of the following:
|  | For the Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Current tax provision (benefit) |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,431,590 |  | $ | — |  | $ | (13,318)
State |  |  | 2,049,850 |  |  | 7,875 |  |  | —
Total current provision (benefit) |  |  | 6,481,440 |  |  | 7,875 |  |  | (13,318)
Deferred tax provision (benefit) |  |  |  |  |  |  |  |  |
Federal |  |  | (3,428,399) |  |  | — |  |  | —
State |  |  | (1,202,807) |  |  | — |  |  | —
Total deferred tax provision (benefit) |  |  | (4,631,206) |  |  | — |  |  | —
Total income tax provision (benefit) |  | $ | 1,850,234 |  | $ | 7,875 |  | $ | (13,318)
The Company had $23.3 million in tax benefits attributable to net operating losses for federal tax purposes as of December 31, 2019, which were fully utilized as of December 31, 2020. The Company has state net operating losses of $3.6 million as of December 31, 2020 which will begin to expire in 2029. The Company also had credits for alternative minimum taxes (“AMT”) paid of $100 thousand as of December 31, 2019. The alternative minimum tax was repealed with the enactment of the Tax Cuts and Jobs Act. The Company recorded the AMT credit as a tax receivable on its financial statements as of December 31, 2019 rather than as a deferred tax asset, as this amount is a refundable credit. The AMT credit refund receivable at December 31, 2019 was claimed on the Company’s 2019 corporate income tax return and was received in 2020. Utilization of the state net operating loss carry forwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by state rules that are similar to the Internal Revenue Code of 1986, as amended. Deferred taxes are provided for those items reported in different periods for income tax and financial reporting purposes. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
|  | December 31,
|  | 2020 |  | 2019
Deferred tax assets |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 198,675 |  | $ | 5,748,724
Accrued expenses and reserves |  |  | 824,920 |  |  | 573,382
Employee stock option expense |  |  | 15,188 |  |  | 75,591
Nonemployee stock option expense |  |  | 8,515 |  |  | 8,207
Inventories |  |  | 98,748 |  |  | 110,455
Impairment |  |  | — |  |  | 111,178
Deferred income – TIA contract |  |  | 5,675,617 |  |  | —
Unrealized gains/losses |  |  | — |  |  | 30,434
Deferred tax assets |  |  | 6,821,663 |  |  | 6,657,971
Deferred tax liabilities |  |  |  |  |  |
Unrealized gains/losses |  |  | (508,197) |  |  | —
Property, plant, and equipment |  |  | (1,682,260) |  |  | (1,628,133)
Deferred tax liabilities |  |  | (2,190,457) |  |  | (1,628,133)
Net deferred assets |  |  | 4,631,206 |  |  | 5,029,838
Valuation allowance |  |  | — |  |  | (5,029,838)
Net deferred tax assets |  | $ | 4,631,206 |  | $ | —
Deferred income tax calculations reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax bases, as well as from net operating loss carry forwards, and are stated at the U.S. tax rate of 21%. Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Deferred tax assets are periodically reviewed for realizability. In prior periods, the Company established a valuation allowance for its net deferred tax asset as future taxable income which could not be reasonably assured. The valuation allowance was fully released during the year ended December 31, 2020. The valuation allowance was decreased by $5,029,838 for 2020 and decreased by $1,121,560 for 2019. Under the Tax Cuts and Jobs Act, net operating losses incurred after December 31, 2017 can only offset 80% of taxable income. However, these net operating losses may be carried forward indefinitely instead of limited to twenty years under previous tax law. Carryback of these losses is no longer permitted. The CARES Act temporarily removed the 80% of taxable income limitation to allow NOL carryforwards to fully offset income. For tax years beginning before 2021, the Company can take an NOL deduction equal to 100% of taxable income. For tax years beginning after 2021, the Company can take: (1) a 100% deduction of NOLs arising in tax years prior to 2018, and (2) a deduction limited to 80% of modified taxable income for NOLs arising in tax years after 2017. A reconciliation of income taxes based on the federal statutory rate and the effective income tax rate is summarized as follows:
|  | December 31, |
|  | 2020 |  | 2019 |  | 2018 |
Income tax at the federal statutory rate |  | 21.0 | % | 21.0 | % | 21.0 | %
State tax, net of federal tax |  | 4.2 |  | 2.0 |  | 3.5 |
Change in valuation allowance |  | (19.2) |  | (35.6) |  | (24.3) |
Permanent differences |  | (0.6) |  | — |  | (0.3) |
Return-to-provision and other |  | 1.7 |  | 12.9 |  | (0.9) |
Tax Reform and Jobs Act tax rate change |  | — |  | — |  | 0.1 |
Effective tax rate |  | 7.1 | % | 0.3 | % | (0.9) | %
The Company files income tax returns in the U.S. federal jurisdiction and in various state and local jurisdictions. The Company’s federal income tax returns for all tax years ended on or after December 31, 2017, remain subject to examination by the Internal Revenue Service. The Company’s state and local income tax returns are subject to examination by the respective state and local authorities over various statutes of limitations, most ranging from three to five years from the date of filing.

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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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