Annual report pursuant to Section 13 and 15(d)

Note 11 - Income Taxes

v3.24.1
Note 11 - Income Taxes
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 11.         Income Taxes

 

Income tax (benefit) expense for the years ended December 31, 2023 and 2022 consists of the following:

 

   

2023

    

2022

  

Current income tax (benefit) expense

                

Federal

   $ (3,101 )   $ 2,533  

State & Local

     3,450       7,566  
      349       10,099  

Deferred income tax (benefit) expense

                

Federal

     (25,650 )     795,001  

State & Local

     (17,284 )     7,357  
      (42,934 )     802,358  

Income tax (benefit) expense

   $ (42,585 )   $ 812,457  

 

The income tax (benefit) expense is at an effective rate different from the federal statutory rate due principally to the following:

 

   

2023

    

2022

  

Loss from continuing operations before taxes

   $ (1,741,027 )   $ (5,493,471 )

Income tax benefit at federal statutory rate

   $ (365,616 )   $ (1,153,629 )

State income tax benefit, net of federal benefit

     (247,516 )     13,334  

Permanent Differences

     (1,782,519 )     155,260  

Net Operating Loss ("NOL") expirations

     28,617       12,431  

Other

     31,234       (174,566 )

Change in federal valuation allowance

     2,293,215       1,959,627  

Income tax (benefit) expense

   $ (42,585 )   $ 812,457  

 

Deferred Income Taxes

 

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities were as follows:

 

   

2023

    

2022

  

Deferred tax assets:

                

Net operating losses

   $ 2,278,585     $ 2,649,902  

Capital loss carryforward

     2,187,720       -  

Stock-based compensation

     742,282       743,915  

Transaction costs

     61,623       -  

Accrued vacations

     41,287       46,665  

Accrued commissions

     4,980       17,836  

Other

     14,008       29,534  

Deferred tax assets before valuation allowance

     5,330,485       3,487,852  

Valuation allowance

     (5,102,758 )     (2,793,271 )

Net deferred tax assets

     227,727       694,581  

Deferred tax liabilities:

                

Intangible Assets

     (243,914 )     (753,702 )

Net deferred tax liabilities

   $ (16,187 )   $ (59,121 )

 

The Company has net operating loss carryforwards of approximately $15.4 million, of which $1.2 million will expire, if unused, between the years 2024 and 2037. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

 

The Company has analyzed its income tax positions using the criteria required by U.S. GAAP and concluded that, as of December 31, 2023 and 2022, it has no material uncertain tax positions and no interest and penalties have been accrued. The Company has elected to recognize any estimated penalties and interest on its income tax liabilities as a component of its provision for income taxes.

 

Our income tax returns are subject to examination by income taxing authorities in all jurisdictions for which we file tax returns, generally for three years after each return was filed, but extending to years from which net operating loss carryforwards are utilized to reduce current year taxes. We are not currently under audit in any jurisdiction.