PROVISION FOR INCOME TAXES

6 Months Ended

Jun. 30, 2021

PROVISION FOR INCOME TAXES [Abstract]

PROVISION FOR INCOME TAXES

12. PROVISION FOR INCOME TAXES

In connection with the closing of the Reverse Merger and Recapitalization, the Company’s tax status changed from an S-corporation to a C-corporation. As a result, the Company is responsible for Federal and State income taxes and must record deferred tax assets and liabilities for the tax effects of any temporary differences that exist on the date of the change. When push down accounting does not apply as part of a business combination, U.S. GAAP requires the effect of the change in tax status to be recognized in the financial statements and the effect is included in income (loss) from continuing operations. The Company recorded deferred income tax expense and a corresponding deferred tax liability of $1,098,481 as of and for the year ended December 31, 2019, of which $1,506,362 was recorded at the time of conversion to a C-corporation (see note 1 (e) income taxes). For the year ended December 31, 2020 the Company recorded deferred income tax benefit of $487,923 and had a net deferred tax liability of $610,558.

The Reverse Merger and Recapitalization between Jensyn Acquisition Corp. and Peck Electric Co. on June 20, 2019 caused a stock ownership change for purposes of Section 382 of the Internal Revenue Code. The Company recognized tax net operating losses which it expects to fully utilize over time subject to annual limitations as set forth in the Internal Revenue Code.

The provision for income taxes for June 30, 2021 and 2020 consists of the following:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Current
Federal	$	-		$	-		$	-		$	-
State		800			-			1,550			750
Total Current		800			-			1,550			750
Deferred
Federal		(342,249	)		(211,671	)		(180,424	)		(320,108	)
State		(109,439	)		(67,603	)		(57,693	)		(102,227	)
Total Deferred		(451,688	)		(279,274	)		(238,117	)		(422,335	)
Benefit from Income Taxes	$	(450,888	)	$	(279,274	)	$	(236,567	)	$	(421,585	)

The Company’s total deferred tax assets and liabilities at June 30, 2021 and December 31, 2020 are as follows:

	June 30, 2021			December 31, 2020
Deferred tax assets (liabilities)
Accruals and reserves	$	23,966		$	23,758
Net operating loss		2,051,743			812,996
Total deferred tax assets		2,075,709			836,754
Property and equipment		(2,289,120	)		(1,447,312	)
Stock-based compensation		(159,030	)		-
Total deferred tax liabilities		(2,448,150	)		(1,447,312	)
Net deferred tax asset (liabilities)	$	(372,441	)	$	(610,558	)

The Company uses a more-likely-than-not measurement for all tax positions taken or expected to be taken on a tax return in order for those tax positions to be recognized in the financial statements. There were no uncertain tax positions as of June 30, 2021 and December 31, 2020. If the Company were to incur interest and penalties related to income taxes, these would be included in the provision for income taxes, there were none as of June 30, 2021 and December 31, 2020, respectively. Generally, the three tax years previously filed remain subject to examination by federal and state tax authorities. The Company does not expect a material change in uncertain tax positions to occur within the next 12 months.

Reconciliation between the effective tax on income from operations and the statutory tax rate is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Income tax (benefit) expense at federal statutory rate	$	(372,816	)	$	(238,010	)	$	(981,608	)	$	(433,845	)
Permanent differences		45,725			16,373			229,515			103,798
Non-deductible goodwill and other intangible		-			-			833,399			-
Other adjustments		-			19,101			-			19,101
State and local taxes net of federal benefit		(123,797	)		(76,738	)		(317,873	)		(110,639	)
Total	$	(450,888	)	$	(279,274	)	$	(236,567	)	$	(421,585	)