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INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 10. INCOME TAXES The Company’s U.S. and foreign loss before income taxes are set forth below: SCHEDULE OF EARNING (LOSS) BEFORE INCOME TAX
|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
United States |  | $ | (7,251,228 | ) |  | $ | (15,420,364 | )
Foreign |  |  | (12,706,165 | ) |  |  | (41,011,337 | )
Total |  | $ | (19,957,393 | ) |  | $ | (56,431,701 | )
For the years ended December 31, 2022 and 2021, the Company recorded an income tax benefit of $1,486,060 and $7,454,805, respectively. The income tax benefit is as follows: SCHEDULE OF INCOME TAX EXPENSE BENEFITS
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax benefit - United States |  | $ | — |  |  | $ | — |
Deferred tax benefit - Foreign |  |  | 1,486,060 |  |  |  | 7,454,805 |
Total income tax benefit |  | $ | 1,486,060 |  |  | $ | 7,454,805 |
The Company’s deferred tax assets and deferred tax liabilities consist of the following: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 8,927,330 |  |  | $ | 5,509,522 |
Stock-based compensation |  |  | 1,348,928 |  |  |  | 858,791 |
Accrued bonus |  |  | — |  |  |  | 121,051 |
Research and development capitalized expenses |  |  | 614,041 |  |  |  | — |
Intangible amortization |  |  | 54,141 |  |  |  | 23,204 |
Other |  |  | 33,453 |  |  |  | 35,456 |
Less valuation allowances |  |  | (10,977,893 | ) |  |  | (6,548,024 | )
Net deferred tax assets |  | $ | — |  |  | $ | — |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Indefinite lived intangible assets |  |  | — |  |  |  | (1,607,122 | )
Net deferred tax liabilities |  | $ | — |  |  | $ | (1,607,122 | )
The Company had the following potentially utilizable net operating loss tax carryforwards: SCHEDULE OF OPERATING LOSS CARRY FORWARDS
|  | 2022 |  |  | 2021 |
|  | December 31, |
|  | 2022 |  |  | 2021 |
Federal |  | $ | 18,349,753 |  |  | $ | 9,411,533 |
State |  | $ | 16,892,754 |  |  | $ | 8,664,242 |
Foreign |  | $ | 16,377,435 |  |  | $ | 11,911,845 |
The Tax Cuts and Jobs Act of 2017 (the “Act”) limits the net operating loss deduction to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. As of December 31, 2022, the Company had federal net operating loss carryforwards and state net operating loss carryforwards of $18,349,753 of $16,892,754, respectively, which can be carried forward indefinitely. In addition, the Company has Canadian net operating loss carryforwards of $16,377,435 which will begin to expire in 2030. ENVERIC BIOSCIENCES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company’s effective tax rate varied from the statutory rate as follows: SCHEDULE OF EFFECTIVE STATUTORY INCOME TAX RATE
|  | December 31, |
|  | 2022 |  |  | 2021 |
Federal income tax at the statutory rate |  |  | (21.0 | )% |  |  | (21.0 | )%
State income tax rate (net of federal) |  |  | (2.6 | )% |  |  | (1.0 | )%
Foreign tax rate differential |  |  | (3.1 | )% |  |  | (4.0 | )%
Intangible asset impairment |  |  | — | % |  |  | 4.3 | %
Non-deductive expenses |  |  | (4.0 | )% |  |  | 1.4 | %
Change in valuation allowance |  |  | 23.3 | % |  |  | 7.0 | %
Effective income tax rate |  |  | (7.4 | )% |  |  | (13.3 | )%
On September 16, 2021, the Company acquired MagicMed. In connection with the acquisition, the Company recorded intangible assets from IPR&D valued at $35,500,000, which would be tested for impairment for book purposes, but without a tax basis, creating a deferred tax liability of $9,061,927. The deferred tax liability decreased to $1,607,122 due to an impairment on intangible asset of $29,048,164 and an impairment of goodwill of $8,225,862 for the year ended December 31, 2021. The deferred tax liability decreased to $— due to an impairment on goodwill and intangible assets of $7,453,662 for the year ended December 31, 2022. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The valuation allowance increased by $4,429,869 and $5,207,872 during the years ended December 31, 2022 and 2021, respectively. The Company files U.S. federal and state returns. The Company’s foreign subsidiary also files a local tax return in their local jurisdiction. From a U.S. federal, state and Canadian perspective the years that remain open to examination are consistent with each jurisdiction’s statute of limitations. As of March 30, 2023, the Company has not filed tax returns for the fiscal years 2022 and 2021. Section 382 The utilization of the Company’s net operating losses may be subject to a substantial limitation in the event of any significant future changes in its ownership structure under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carryforwards before their utilization. Section 174 Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to amortize US expenses over five years and foreign expense over fifteen years pursuant to IRC Section 174. The Company has estimated and capitalized gross $2,684,319 of research and development expenditures that will be amortized primarily over five years. This did not have a material impact on the Company’s tax liability for the year ended December 31, 2022. The Company will continue to evaluate the impact of these tax law changes on the current and future periods. Inflation Reduction Act On August 16, 2022, President Joe Biden signed the Inflation Reduction Act of 2022 (the “Act”) into law. The Act includes a new 15% corporate minimum tax and a 1% excise tax on the value of corporate stock repurchases, net of new share issuances, after December 31, 2022. The Company does not expect these provisions to have a material impact on the Company’s consolidated financial position; however, the Company will continue to evaluate their impact as further information becomes available.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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