v3.22.4
Income Taxes
 3 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

Note 16. INCOME TAXES

 

On March 27, 2020, the CARES Act was enacted and signed into law and includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative minimum tax credit refunds. The Company does not at present expect the provisions of the CARES Act to have a material impact on its tax provision given the amount of net operating losses currently available.

    

The Company’s income tax expenses for three months ended September 30, 2022 and 2021 are as follows:

 

  

For the Three Months Ended
September 30

 
   2022   2021 
         
Current        
U.S.  $(103,426)  $
     -
 
PRC   
-
    
-
 
Total income tax expenses   (103,426)   
-
 

 

The Company’s deferred tax assets are comprised of the following:

 

   September 30,
2022		   June 30,
2022		 
Allowance for credit losses        
U.S.  $554,000   $617,000 
PRC   1,719,000    1,830,000 
           
Net operating loss          
U.S.   5,293,000    4,628,000 
PRC   1,362,000    1,283,000 
Total deferred tax assets   8,928,000    8,358,000 
Valuation allowance   (8,928,000)   (8,358,000)
Deferred tax assets, net - long-term  $
-
   $
-
 

 

The Company’s operations in the U.S. incurred a cumulative U.S. federal net operation losses (“NOL”) of approximately $22,000,000 as of June 30, 2022, which may reduce future federal taxable income. During the three months ended September 30, 2022, approximately $3,200,000 of NOL was generated and the tax benefit derived from such NOL was approximately $700,000. As of September 30, 2022, the Company’s cumulative NOL amounted to approximately $25,200,000   which may reduce future federal taxable income, of which approximately $1,400,000 will expire in 2037 and the remaining balance carried forward indefinitely.

 

The Company’s operations in China incurred a cumulative NOL of approximately $1,283,000 as of June 30, 2022 which was mainly from net loss. During the three months ended September 30, 2022, additional NOL of approximately $1,719,000 was generated. As of September 30, 2022, the Company’s cumulative NOL amounted to approximately $1,362,000 which may reduce future taxable income which will expire by 2026.

 

The Company periodically evaluates the likelihood of the realization of deferred tax assets (“DTA”) and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the company’s reorganization and venture into new businesses. The Company provided a 100% allowance for its DTA as of September 30, 2022. The net increase in valuation for the three months ended September 30, 2022 amounted to approximately $570,000, based on management’s reassessment of the amount of the Company’s deferred tax assets that are more likely than not to be realized.

 

The Company’s taxes payable consists of the following:

 

   September 30,   June 30, 
   2022   2022 
VAT tax payable  $2,268,251   $1,098,862 
Corporate income tax payable   1,040,883    2,295,803 
Others   58,580    62,512 
Total  $3,367,714   $3,457,177