Annual report pursuant to Section 13 and 15(d)

Note 9 - Income Taxes

v3.21.1
Note 9 - Income Taxes
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
9.
           
Income Taxes
 
The tax effects of significant temporary differences representing deferred tax assets at
December 31, 2020
and
2019
are as follows:
 
   
2020
    
2019
  
Deferred tax assets (liabilities)
                
Net operating loss carryforwards
   $
691,000
     $
916,200
  
Accrued commissions
    
39,600
      
9,000
  
Accrued vacation
    
37,600
      
21,200
  
Property and equipment
    
(24,500
 )    
(23,500
 )
Other
    
2,400
      
3,700
  
Subtotal
    
746,100
      
926,600
  
Valuation allowance
    
(746,100
 )    
(926,600
 )
Total
   $
-
     $
-
  
 
The provision for income taxes is at an effective rate different from the federal statutory rate due principally to the following:
 
   
December 31,
  
   
2020
    
2019
  
Income (loss) before taxes
   $
413,379
     $
(717,246
 )
Income tax expense (benefit) on above amount at federal statutory rate
   $
86,800
     $
(150,600
 )
State income tax expense (benefit), net of federal benefit
    
20,700
      
(35,900
 )
Permanent differences
    
7,400
      
2,900
  
Other
    
(1,000
 )    
(1,300
 )
NOL Expirations
    
66,600
      
1,302,000
  
Change in valuation allowance
    
(180,500
 )    
(1,117,100
 )
Provision for income taxes
   $
-
     $
-
  
 
Income tax expense for the years ended
December 31, 2020
and
2019
consists of the following:
 
    December 31,  
Current income taxes
  
2020
    
2019
  
Federal
   $
128,200
     $
-
  
State
    
30,500
      
-
  
Benefit from utilization of net operating losses
    
(158,700
 )    
-
  
Subtotal
    
-
      
-
  
Deferred taxes
    
-
      
-
  
Provision for income taxes
   $
-
     $
-
  
 
The Company has recorded a valuation allowance to the full extent of its currently available net deferred tax assets which the Company determined to be
not
more-likely-than-
not
realizable. The Company has net operating loss carryforwards of approximately
$2.7
million, of which
$1.3
million will expire, if unused, between the years
2021
and
2036.
 
The Company
may
have been deemed to have experienced changes in ownership which
may
impose limitations on its ability to utilize net operating loss carryforwards under Section
382
of the Internal Revenue Code. However, as the deferred tax asset is fully offset by a valuation allowance, the Company has
not
yet conducted a Section
382
study to determine the extent of any such limitations.
 
The Company has analyzed its income tax positions using the criteria required by U.S. GAAP and concluded that as of
December 31, 2020
and
2019,
it has
no
material uncertain tax positions and
no
interest or 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.
 
The income tax returns of the Company are subject to examination by income taxing authorities in all jurisdictions for which the Company files tax returns, generally for
three
years after each was filed, but extending to years from which net operating loss carryforwards are utilized to reduce current year taxes.  The Company is
not
currently under audit in any jurisdiction.