Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note

11.

Income Taxes

Deferred income taxes reflect the net tax effect 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 the Company's deferred tax asset are as follows at

December 31:

	2020			2019
Deferred tax assets:
Net operating loss carryforwards	$	8,277,000		$	10,753,000
Depreciation and amortization		827,000			668,000
Non-cash compensation		(225,000	)		(69,000	)
Other		49,000			46,000
Valuation Allowance		(7,534,000	)		(10,004,000	)
Deferred tax asset	$	1,394,000		$	1,394,000

Management has reviewed its net deferred asset position, and due to the history of operating losses has determined that the application of a valuation allowance at

December 31, 2020

and

2019

is warranted. If applicable, the Company would recognize interest expense and penalties related to uncertain tax positions in interest expense. As of

December 31, 2020

, the Company had

not

accrued any interest or penalties related to uncertain tax provisions.

The Company has net operating loss carryforwards for tax purposes of approximately

$39.4

 million. Net operating loss carryforwards prior to

2017

are available to offset taxable income of future periods and begin to expire in

2021.

Effective for tax years ending in

2018

or later, net operating losses cannot be carried back but can be carried forward to future tax years indefinitely, subject to annual limitations for utilization. Approximately

$0.5

 million of the total net operating loss is subject to an IRS Section

382

limitation from

1999.

The tax provision for federal and state income tax is as follows for the years ended

December 31:

	2020		2019
Current provision:
Federal	$	—	$	—
State		118,057		101,888
		118,057		101,888
Deferred provision:
Federal expense		—		—
Expense for income taxes	$	118,057	$	101,888

The reconciliation of federal income tax computed at the U.S. federal statutory tax rates to total income tax expense is as follows for the years ended

December 31:

	2020			2019
Income tax (benefit) at 21%	$	(610,000	)	$	(1,074,000	)
Change in valuation allowance		(2,470,000	)		1,102,000
Permanent and other differences		3,080,000			(28,000	)
Alternative minimum tax and state taxes		118,057			101,888
Income tax expense	$	118,057		$	101,888