Income Taxes

12 Months Ended

Dec. 31, 2019

The provision for income taxes consists of the following at December 31, 2019 and 2018:


	2019		2018
Current tax provision	$	—	$	—
Deferred tax benefit	(334,394)		—
Total tax benefit	$	(334,394)	$	—

A reconciliation of the expected Federal statutory rate to our actual rate as reported for each of the periods presented is as follows:


	2019		2018
Federal statutory rate	21	%	21	%
State income tax rate, net of federal benefit	1	%	(1	%)
Permanent differences	(3	%)	(2	%)
Change in valuation allowance	(12	%)	(18	%)
	7	%	—	%

Deferred Income Taxes

Deferred income taxes are the result of temporary differences between book and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items and net operating loss carry-forwards.

We assess temporary differences resulting from different treatments of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are recorded in the consolidated balance sheets. We evaluate the realizability of our deferred tax assets on a regular basis, an exercise that requires significant judgment. In the course of this evaluation we

considered our recent history of tax losses, the economic conditions in which we operate, recent organizational changes and our forecasts and projections. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance for the net deferred tax assets that may not be realized as of December 31, 2019 and 2018.

The following is a schedule of the deferred tax assets and liabilities as of December 31, 2019 and 2018:


	2019		2018
Deferred tax assets:
Net operating loss carry forward	$	32,742,350	$	31,473,506
Intangible assets	686,400		863,400
Accrued expense	223,100		142,000
Deferred rent	15,700		27,000
Allowance for doubtful accounts	61,700		17,500
Other	258,600		140,300
Subtotal	33,987,850		32,663,706
Less valuation allowance	(33,987,850)		(32,663,706)
Total	—		—
Deferred tax liabilities:
Intangible assets and property and equipment	1,989,800		2,162,500
Other	29,400		177,332
Total	2,019,200		2,339,832
Total deferred tax liabilities	$	(2,019,200)	$	(2,339,832)

The net operating losses amounted to approximately $92,335,523 and expire beginning 2022 through 2037. Pursuant to Internal Revenue Service Code Section 382, the use of certain of the Company’s net operating loss carry forwards are limited due to a cumulative change in ownership.

We are currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending December 31, 2016 through 2018. Our state income tax returns are open to audit under the statute of limitations for the same periods.

We recognize interest and penalties related to income taxes in income tax expense. We have incurred no penalties and interest for the years ended December 31, 2019 and 2018.