Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

Note 9 - Income Taxes

 

The components of deferred taxes are as follows:

 

               
    Year Ended December 31,
    2021   2020
Deferred tax assets:        
Net operating loss carry forwards     1,752,000       1,313,000  
Stock based compensation     48,000       45,000  
Property and equipment     217,000       182,000  
Other     51,000       8,000  
Total deferred tax assets     2,068,000       1,548,000  
Deferred tax liabilities:                
Intangibles     (91,000 )     —  
Other     (308,000 )     —  
Total deferred tax liabilities     (399,000 )     —  
                 
Valuation Allowance     (1,669,000 )     (1,548,000 )
                 
Net deferred tax liabilities     —     —  

 

The Company had federal and state net operating tax loss carry-forwards of $5,935,000 and $5,605,000, respectively as of December 31, 2021. The tax loss carry-forwards are available to offset future taxable income with the federal and state carry-forwards beginning to expire in 2028.

 

In 2021 and 2020, net deferred tax assets did not change due to the full allowance. The gross amount of the asset is entirely due to the net operating loss carry-forward. The realization of the tax benefits is subject to the sufficiency of taxable income in future years. The combined deferred tax assets represent the amounts expected to be realized before expiration.

 

The Company periodically assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible profits. As a result of this analysis of all available evidence, both positive and negative, the Company concluded that it is more likely than not that its net deferred tax assets will ultimately not be recovered and, accordingly, a valuation allowance was recorded as of December 31, 2021 and 2020.

 

A reconciliation of the Company’s effective income tax rate to the expected income tax rate, computed by applying the federal statutory income tax rate of 21.0% for each of the years ended December 31, 2021 and 2020 to the Company’s loss before provision (benefit) for income taxes, is as follows:

 

               
    2021   2020
U.S. federal statutory rate     21.0 %     21.0 %
State taxes     7.1 %     7.1 %
                 
           
Valuation allowance     (12.2 )%     (28.1 )%
Income tax provision     (12.9 )%     — %