Annual report pursuant to Section 13 and 15(d)

Note 22 - Income Tax

v3.21.1
Note 22 - Income Tax
12 Months Ended
Dec. 31, 2020
Notes  
Note 22 - Income Tax

Note 22 – Income tax

 

The provision (benefit) for income taxes for the years ended December 31, 2020 and 2019 consist of the following:

 

 

 

2020

 

2019

Current:

 

 

 

 

Federal

$

(1,500)

$

-

State

 

11,550

 

14,828

 

 

10,050

 

14,828

Deferred:

 

 

 

 

Federal

 

(292,000)

 

727,900

State

 

(105,100)

 

391,600

Change in valuation

 

397,100

 

(1,119,500)

 

Total provision (benefit)

$

10,050

$

14,828

 

The Company has net deferred tax assets resulting from a timing difference in recognition of depreciation and reserves for uncollectible accounts receivable and from net operating loss carryforwards.

 

At December 31, 2020, the Company had approximately $7,950,000 of federal net operating loss carryforwards of which approximately $3,443,000 can be carried forward indefinitely and the remaining balance will expire in between 2027 and 2036. The Company has a California net operating loss carryforward of approximately $6,480,000 that begins expiring in 2024. Mentor relocated to Texas in September 2020 and the Company’s ability to utilize the California net operating loss carryforwards is dependent on future generation of California taxable income. The Company has an Arizona net operating loss carry forward of approximately $147,000 that begins expiring in 2031.

 

The income tax provision (benefit) differs from the amount computed by applying the U.S. federal statutory tax rate of 21% in 2020 and 2019 to net income (loss) before income taxes for the years ended December 31, 2020 and 2019 as a result of the following:

 

 

 

2020

 

2019

Net income (loss) before taxes

$

(667,491)

$

(3,418,632)

US federal income tax rate

 

21%

 

21%

 

 

 

 

 

Computed expected tax provision (benefit)

 

(140,173)

 

(717,913)

Permanent differences and other

 

537,273

 

(401,587)

Change in valuation

 

(397,100)

 

1,119,500

Federal income tax provision

$

-

$

-

 

The significant components of deferred income tax assets as of December 31, 2020 and 2019 after applying enacted corporate income tax rates are as follows:

 

 

 

2020

 

2019

Net Operating Losses carried forward

$

2,249,900

$

2,641,300

Deferred officer bonus and other

 

88,400

 

94,000

Valuation allowance

 

(2,338,300)

 

(2,735,300)

 

$

-

$

-

 

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. All tax years from 2017 to 2020 are subject to examination