Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Taxes

G. Income Taxes

Income tax expense for the years ending December 31 consisted of:

	2022		2021
Federal:
Current	$	-	$	-
Deferred		-		-
State and local:
Current		9,366		723
Deferred		-
Total	$	9,366	$	723

A reconciliation of the federal statutory rate to the effective tax rate for 2022 and 2021 is set forth below:

	2022			2021
Statutory Federal income tax rate		21.0	%		21.0	%
State income tax, net of Federal benefit		4.19	%		5.10	%
State Valuation Allowance		-4.98	%		-5.14	%
Federal Valuation Allowance		-20.04	%		-21.20	%
Other		-1.17	%		0.19	%
Effective income tax rate		-1.00	%		-0.05	%

Significant components of our net deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows:

	2022			2021
Deferred tax assets:
Federal and State NOL Carryforward		1,017,434			779,104
Capital loss carryforward		5,708			-
Other		17,167			13,640
Total Gross DTA		1,040,309			792,744
Less: Valuation Allowance		(1,037,374	)		(789,809	)
Total Deferred Tax Assets		2,935			2,935
Deferred tax liabilities:
Stock Based Compensation		(2,935	)		(2,935	)
Deferred State Income Tax		-			-
		(2,935	)		(2,935	)
Net deferred tax assets		-			-

In accordance with IRC Section 382, corporations are generally required to limit the amount of its income in future years that can be offset by historic losses, i.e., net operating loss (NOL) carryforwards and certain built-in losses, after a corporation has undergone an ownership change. As a result of the Company’s equity financings in recent years, the Company underwent changes in ownership pursuant to the provisions of the IRC Section 382, therefore, annual use of any of the Company’s net operating loss carry forwards may be limited if cumulative changes in ownership of more than 50% occur during any three-year period.

At December 31, 2022 and 2021, for Federal taxes and for certain states in which the Company files separate tax returns, the Company recorded net deferred tax assets of approximately $1,037,374 and $789,809 respectively, relating mainly to net operating losses. The Company concluded that it is not more likely than not that the benefit from these net assets will be realized and has provided a valuation allowance for the full amount of the net deferred tax assets.

Included in taxes receivable of $290,785 the amount of $273,735 and a payable of $46,849, respectively, represent a net balance due from AC for the Compnay’s losses utilized by AC through the date of the spin-off, August 5, 2020. These amounts were settled in 2023.

As of December 31, 2022, the Company is not aware of any potentially material uncertain tax positions that were not included in the Company’s consolidated financial statements. The Company, which includes G. research and was part of AC’s unitary filing group through August 5, 2020, is not under any tax examination as of December 31, 2022. The Company has filed its 2021 corporate income tax returns in states where they have determined a filing obligation exists. The Company believes there are no uncertain tax positions (“UTPs”) as it relates to their federal and state filings, and as such has not recorded any tax expense related to UTPs.

As of December 31, 2022 and 2021, management has not identified any potential subsequent events that could have a significant impact on unrecognized tax benefits within the next twelve months. The Company remains subject to income tax examination by the Internal Revenue Service for years after 2018 and state examinations for years after 2017.