XML 31 R15.htm IDEA: XBRL DOCUMENT v3.22.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES

9. INCOME TAXES

 

Reconciliation of the benefit for income taxes from continuing operations recorded in the consolidated statements of operations with the amounts computed at the statutory federal tax rates for each year:

 

   2021   2020 
Federal tax at statutory rate  $852,198   $67,862 
State tax, net of federal tax   (487,093)   29,866 
Permanent differences   (259,967)   126,301 
Change in statutory rate   59,168    (69,835)
Change in valuation allowance   614,112    522,738 
Other   6,892    (13,882)
Expense for income taxes  $785,310   $663,050 

 

Tax affected components of deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020 were as follows:

 

   2021   2020 
Deferred tax assets (liabilities):        
Equity based compensation  $479,956   $368,000 
Allowance for doubtful accounts   6,847,189    5,527,000 
Fixed assets   (8,085,957)   256,000 
Lease impairment   423,022    587,000 
Lease Liability   481,312    526,000 
Right of use asset   (383,924)   (425,000)
Tax credit carryforward   32,394    32,000 
Federal loss carry-forwards   11,838,840    4,779,000 
State loss carry forward   343,914    161,000 
Other   (53,414)   (6,000)
Gross deferred tax   11,923,332    11,805,000 
Valuation allowance   (12,418,498)   (11,805,000)
Net deferred tax liability  $(495,166)  $
-
 

 

Based on consideration of the available evidence, including historical losses, a valuation allowance has been recognized to offset certain deferred tax assets, as management was unable to conclude that realization of deferred tax assets were more likely than not.

 

As of December 31, 2021, the Company has federal and state net operating loss carryforwards of approximately $56,375,431 and $4,878,909, respectively, available to offset future income. Our federal loss carryforwards do not expire.

 

The components of income tax expense (benefits) for the years ended December 31, 2021 and 2020 were as follows:

 

   2021   2020 
Current Income Tax:        
Federal  $
-
   $
-
 
State   290,144    663,050 
Deferred Income Tax:          
Federal   495,166    
-
 
Sate   -    
-
 
   $785,310   $663,050 

 

The Company’s effective tax rate for the year ended December 31, 2021 and 2020 differs from the statutory rate of 21% primarily due to a valuation allowance applied against the Company’s net deferred tax assets. State taxes and permanent differences also impacted the effective tax rate. The Company accrued a $290,144 current state income tax expense for the year ended December 31, 2021 for certain states in which taxable income exceeded available net operating loss carryforwards.

 

The Company files tax returns in the U.S. federal jurisdiction and various states.  At December 31, 2021, federal tax returns remained open for Internal Revenue Service review for tax years after 2017, while state tax returns remain open for review by state taxing authorities for tax years after 2017.  The IRS can examine net operating loss carryforwards from earlier years the extent utilized in years after 2017. During 2019, the Company was notified that its 2017 federal income tax return was selected for examination. In the second quarter of 2021, the IRS completed their review with no changes to the reported tax.. There were no other federal or state income tax audits being conducted as of December 31, 2021.

The Company completed its analysis and review of all tax positions taken through December 31, 2021 and does not believe that there are any unrecognized tax benefits related to tax positions taken on its income tax returns.