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INCOME TAXES

12 Months Ended

Dec. 31, 2022

NOTE 14 – INCOME TAXES

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act reduced the U.S. federal statutory tax rate, broadened the corporate tax base through the elimination or reduction of deductions, exclusions, and credits, limited the ability of U.S. corporations to deduct interest expense, and transitioned to a territorial tax system which allows for the repatriation of foreign earnings to the U.S. with a 100% federal dividends received deduction prospectively. In addition, the Tax Act required a one-time transitional tax on foreign cash equivalents and previously unremitted earnings. Several of the new provisions enacted as part of the Tax Act require clarification and guidance from the U.S. Internal Revenue Service (“IRS”) and Treasury Department. These or other changes in U.S. tax laws could impact our profits, effective tax rate, and cash flows.

Significant components on the Company’s income tax provision for continuing operations is as follows:

	For the Years Ended
	December 31,
	2022		2021			2020
Current
Domestic-Federal	$	1,787,793	$	1,080,572		$	-
Domestic-State		719,490		618,341			-
Texas Franchise Tax		46,243		-			-
Foreign		-		-			-
		2,553,526		1,698,913			-
Deferred
Domestic-Federal		190,517		(257,461	)		-
Domestic-State		53,612		(74,090	)		-
Foreign		-		-			-
		244,129		(331,551	)		-
Total Provision for Income Taxes	$	2,797,655	$	1,367,362		$	-

The Company currently believes that all significant filing positions are highly certain and that all of its significant income tax filing positions and deductions would be sustained upon audit. Therefore, the Company has no significant reserves for uncertain tax positions and no adjustments to such reserves were required by generally accepted accounting principles. The Company’s policy is to recognize accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The Company’s tax returns are subject to examination for the years ended December 31, 2017 through 2022.

A reconciliation of the amount of tax provision (benefit) computed using the U.S. federal statutory income tax rate to the provision for income taxes on continuing operations is as follows:

	For the Years Ended
	December 31,
	2022			2021			2020

Domestic-Federal	$	2,098,733		$	1,505,142		$	(306,805	)
State taxes, net of federal benefit		641,946			433,140			-
Non-deductible expenses		(1,291	)		7,529			1,578
Texas franchise tax		46,243			-			-
Revision of prior years' provision to return filing		(2,938	)		(20,979	)		(38,556	)
Change in estimated future income tax rates		(39,355	)		(609,673	)		-
Change in valuation allowance		40,465			52,203			343,783
Other		13,851			-			-
Total Provision (Benefit) for Income Taxes	$	2,797,655		$	1,367,362		$	-

Deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows:

	December 31,			December 31,
	2022			2021
Deferred Tax Assets:
Stock-based compensation	$	2,754,875		$	2,714,410
Sales Allowances		256,650			-
Accrued Related Party Expenses		612			259,463
Impairment of SmplyLifted Note and Other Receivables		-			105,124
Allowance for Doubtful Accounts		77,269			64,661
Other		23,060			8,725
Less: Valuation allowance for stock-based compensation		(2,754,875	)		(2,714,410	)
Total Deferred Tax Assets		357,591			437,973

Deferred Tax Liabilities:
Depreciation & Amortization		(270,169	)		(105,143	)
Other		-			(1,279	)
Total Deferred Tax Liabilities		(270,169	)		(106,422	)

Net Deferred Tax Assets	$	87,422		$	331,551