Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 12 – Income Taxes

The Company performs an evaluation of the realizability of its deferred tax assets on a semi-annual basis.  The Company considers all positive and negative evidence available in determining the potential of realizing deferred tax assets, including the scheduled reversal of temporary differences, recent and projected future taxable income and prudent and feasible tax planning strategies.  The estimates and assumptions used by the Company in computing the income taxes reflected in the accompanying consolidated financial statements could differ from the actual results reflected in the income tax returns filed during the subsequent year. Adjustments are recorded based on filed returns when finalized or the related adjustments are identified.

Under ASC 740-10-30-5, Income Taxes, deferred tax assets should be reduced by a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not (i.e., a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The Company considers all positive and negative evidence available in determining the potential realization of deferred tax assets including, primarily, the recent history of taxable earnings or losses. Based on operating losses reported by the Company during 2021, 2020, 2019, 2018, 2017 and 2016, the Company concluded there was not sufficient positive evidence to overcome this recent operating history. As a result, the Company believes that a valuation allowance is necessary based on the more-likely-than-not threshold noted above. The Company recorded a valuation allowance of approximately of $1,681,700 as of December 31, 2021 and approximately $1,396,900 as of December 31, 2020 equal to its deferred tax asset at that time. The valuation allowance reflects the decrease in deferred tax assets resulting from the Tax Cuts and Jobs Act of 2017. The Company’s net operating losses carryforward as of December 31, 2021 and 2020 were approximately $4,623,000 and $3,349,000, respectively, and can be carried forward indefinitely.

Significant components of the tax expense (benefit) recognized in the accompanying consolidated statements of operations for the period December 31, 2021 and December 31, 2020 are as follows:

	Year Ended			Year Ended
	December 31, 2021			December 31, 2020
Current tax benefit
Federal	$	(247,762	)	$	(466,975	)
State		(50,904	)		(96,630	)
Total current tax benefit		(298,666	)		(563,605	)
Deferred tax expense		144,541			266,357
Rate change adjustment		(2,844	)		3,937
Valuation allowance		156,969			293,311
Income tax benefit	$	-		$	-

The reconciliation of the income tax computed at the combined federal and state statutory rate of 12.6% as of December 31, 2021 and 17.1% as of December 31, 2020 to the income tax benefit is as follows:

	Year Ended					Year Ended
	December 31, 2021					December 31, 2020
Benefit on net loss		(156,142	)	12.6	%		(313,001	)	17.1	%
Nondeductible expenses		2,017		-0.3	%		15,753		-1.0	%
Rate change adjustment		(2,844	)	0.2	%		3,937		-0.2	%
Valuation allowance		156,969		-12.5	%		293,311		-15.9	%
Tax benefit/effective rate		-		0.0	%		-		0.0	%

The significant components of the Company’s deferred tax liabilities and assets as of December 31, 2021 and December 31, 2020 are as follows:

	As of December 31, 2021			As of December 31, 2020
Deferred tax assets:
Tax expense for debt issuance costs	$	157,926		$	170,241
Loss carryforwards		1,464,345			1,161,562
Organizational costs		59,394			65,050
Total deferred tax asset		1,681,665			1,396,853
Valuation allowance		(1,681,665	)		(1,396,853	)
Net deferred tax asset	$	-		$	-

The Company’s federal and state tax returns for the 2017 through 2020 tax years generally remain subject to examination by U.S. and various state authorities.