Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision for income taxes consists of the following at December 31, 2020 and 2019:
  2020 2019
Current tax provision $ —  $ — 
Deferred tax benefit —  (334,394)
Total tax benefit $ —  $ (334,394)

A reconciliation of the expected Federal statutory rate to our actual rate as reported for each of the periods presented is as follows:
  2020 2019
Federal statutory rate 21  % 21  %
State income tax rate, net of federal benefit —  % %
Permanent differences % (3  %)
Change in valuation allowance (25  %) (12  %)
  —  % %

Deferred Income Taxes
 
Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards.

When required, the Company records a liability for unrecognized tax positions, defined as the aggregate tax effect of differences between positions taken on tax returns and the benefits recognized in the financial statements. Tax positions are measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. No tax benefits are recognized for positions that do not meet this threshold. The Company has no uncertain tax positions that
require the Company to record a liability. The federal income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.
 
We assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in the consolidated balance sheets. We evaluate the realizability of our deferred tax assets on a regular basis, an exercise that requires significant judgment. In the course of this evaluation we considered our recent history of tax losses, the economic conditions in which we operate, recent organizational changes and our forecasts and projections. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance for a significant portion of the net deferred tax assets that may not be realized as of December 31, 2020 and 2019.

The following is a schedule of the deferred tax assets and liabilities as of December 31, 2020 and 2019:
  2020 2019
Deferred tax assets:    
Net operating loss carry forward $ 36,484,500  $ 32,742,350 
Intangible assets 447,700  686,400 
Accrued expense 211,600  223,100 
Deferred rent 18,000  15,700 
Allowance for doubtful accounts 58,800  61,700 
Other 472,500  258,600 
Subtotal 37,693,100  33,987,850 
Less valuation allowance (35,848,400) (32,075,650)
Total 1,844,700  1,912,200 
Deferred tax liabilities:    
Intangible assets and property and equipment 1,449,900  1,989,800 
Other 501,800  29,400 
Total 1,951,700  2,019,200 
Total deferred tax liabilities $ (107,000) $ (107,000)
 
The net operating losses amounted to approximately $102,756,587 and expire beginning 2022 through 2037. Pursuant to Internal Revenue Service Code Section 382, the use of certain of the Company’s net operating loss carry forwards are limited due to a cumulative change in ownership.
 
We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2017 through 2019. Our state income tax returns are open to audit under the statute of limitations for the same periods.
We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties and interest for the years ended December 31, 2020 and 2019.