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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 10 - INCOME TAXES Following is a summary of the components giving rise to the income tax provision (benefit) for the years ended December 31: The provision (benefit) for income taxes consists of the following:
|  | 2018 |  |  | 2017 |
Currently payable: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | (16,694 | )
State |  |  | 6,920 |  |  |  | 8,572 |
Total currently payable |  |  | 6,920 |  |  |  | (8,122 | )
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 458,446 |  |  |  | (410,402 | )
State |  |  | 67,451 |  |  |  | (58,001 | )
Foreign |  |  | (92,690 | ) |  |  | - |
Total deferred |  |  | 433,207 |  |  |  | (468,403 | )
Less: increase in allowance |  |  | (423,534 | ) |  |  | 524,381 |
Plus: effect of tax change |  |  | - |  |  |  | (68,818 | )
Net deferred |  |  | 9,673 |  |  |  | (12,840 | )
Total income tax provision (benefit) |  | $ | 16,593 |  |  | $ | (20,962 | )
Individual components of deferred taxes are as follows:
|  |  | 2018 |  |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carry forwards |  | $ | 10,135,005 |  |  | $ | 10,173,774 |
Equity issued for services |  |  | 152,240 |  |  |  | 146,029 |
Goodwill and other intangibles |  |  | 788,288 |  |  |  | 828,506 |
Investment in pass-through entity |  |  | 11,499 |  |  |  | 11,575 |
Deferred revenue |  |  | 472,466 |  |  |  | 807,959 |
Other |  |  | 470,780 |  |  |  | 522,937 |
Gross deferred tax assets |  |  | 12,030,278 |  |  |  | 12,490,780 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill and other intangibles |  |  | 33,333 |  |  |  | - |
Depreciation and amortization |  |  | 31,512 |  |  |  | 62,288 |
Investment in pass-through entity |  |  | - |  |  |  | - |
Gross deferred tax liabilities |  |  | 64,845 |  |  |  | 62,288 |
Less: valuation allowance |  |  | (12,134,419 | ) |  |  | (12,554,474 | )
Net deferred tax liabilities |  | $ | (168,986 | ) |  | $ | (125,982 | )
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) elimination of the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; and (3) changing rules related to usage and limitation of net operating loss carryforwards created in tax years beginning after December 31, 2017, The effect of the rate change attributable to the Tax Act on the Company’s effective tax rate was 11.5% (or $68,818) decrease in the net deferred tax liability. The Tax Act repeals the corporate alternative minimum tax (AMT) and permits existing minimum tax credits carryovers to offset the regular tax liability for any tax year. Further, the credit is refundable for any tax year beginning after December 31, 2017 and before December 31, 2020 in an amount equal to 50 percent of the excess of the minimum tax credit over regular liability. Any remaining credit will be fully refundable for the year ended December 31, 2021. As of December 31, 2018, the Company had $93,201 of minimum tax credit recorded as a deferred tax asset, which was reclassified as to a current and non-current receivable of $46,600 and $46,601 respectively. The Company has approximately $46.6 million in federal net operating loss carryforwards (“NOLs”) available to reduce future taxable income, which will expire at various dates from 2022 through 2037. Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the NOLs before they expire and any other deferred tax assets, the Company has recorded a valuation allowance accordingly. The Company’s NOLs are subject to annual limitations as a result of a change in its equity ownership as defined under the Internal Revenue Code Section 382. These limitations, as applicable, could further limit the use of the NOLs. The valuation allowance for deferred tax assets decreased by approximately $424,000 in the year ended December 31, 2018. The decrease in the valuation allowance was primarily due to taxable income in the current year. The Company has adopted the provisions of ASU 2016-09 as of the beginning of the year which requires recognition through opening retained earnings of any pre-adoption date NOL carryforwards from nonqualified stock options and other employee share-based payments (e.g., restricted shares and share appreciation rights), as well as recognition of all income tax effects from share-based payments arising on or after January 1, 2017 (our adoption date) in income tax expense. In light of the Company’s valuation allowance on its deferred tax assets there was no adjustment required to its retained earnings nor was there any windfall tax benefit to recognize in the Company’s income tax provision. The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying consolidated statements of operations are as follows:
|  | 2018 |  |  | 2017 |
Statutory United States federal rate |  |  | 21.0 | % |  |  | 34.0 | %
State income taxes net of federal benefit |  |  | 4.0 |  |  |  | 5.5 |
Permanent differences |  |  | 2.2 |  |  |  | 0.8 |
Other |  |  | 0.7 |  |  |  | - |
Foreign taxes |  |  | 1.7 |  |  |  | - |
Tax rate change |  |  | - |  |  |  | 11.5 |
Change in valuation reserves |  |  | (28.5 | ) |  |  | (48.3 | )
Effective tax rate |  |  | 1.1 | % |  |  | 3.5 | %
The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2018 and 2017, the Company recognized no interest and penalties. The Company files income tax returns in the U.S. federal jurisdiction and various states. The tax years 2015-2018 generally remain open to examination by major taxing jurisdictions to which the Company is subject. Certain amounts in the note above and the associated amounts included in the balance sheet as of December 31, 2017 have been reclassified to conform to the December 31, 2018 presentation.

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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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