Income tax |
Note
20 – Income tax
The
provision (benefit) for income taxes for the years ended December 31, 2023 and 2022 consist of the following:
Schedule of components of income tax expense (benefit)
|
|
2023 |
|
|
2022 |
|
Current taxes from continuing operations: |
|
|
|
|
|
|
|
|
Federal |
|
$ |
- |
|
|
$ |
- |
|
State |
|
|
8,160 |
|
|
|
6,768 |
|
Total current |
|
|
8,160 |
|
|
|
6,768 |
|
|
|
|
|
|
|
|
|
|
Taxes from discontinued operations(1): |
|
|
|
|
|
|
|
|
Federal |
(1) |
|
5,783 |
|
|
|
7,615 |
|
State |
(1) |
|
5,783 |
|
|
|
7,615 |
|
Tax provision from discontinued operations |
(1) |
|
13,943 |
|
|
|
14,838 |
|
|
|
|
|
|
|
|
|
|
Deferred tax asset: |
|
|
|
|
|
|
|
|
Federal |
|
|
(273,400 |
) |
|
|
107,700 |
|
State |
|
|
1,100 |
|
|
|
18,300 |
|
Change in valuation |
|
|
(272,300 |
) |
|
|
(126,000 |
) |
Total provision (benefit) |
|
$ |
13,943 |
|
|
$ |
14,383 |
|
(1) |
We sold our entire
ownership interest in WCI on October 4, 2023 and as a result WCI is excluded from our continuing operations and presented as discontinued
operations. See Note 3. |
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, 2023, the Company had approximately $6,300,000 of federal net operating loss carryforwards, of which approximately $3,500,000
can be carried forward indefinitely, and the remaining $2,800,000 will begin to expire in 2034 and be fully expired by the year 2037.
The Company has a California net operating loss carryforward of approximately $6,500,000 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
the future generation of California taxable income.
The
income tax provision (benefit) differs from the amount computed by applying the U.S. federal statutory corporate income tax rate of 21%
in 2023 and 2022, respectively, to net income (loss) before income taxes for the years ended December 31, 2023 and 2022 as a result of
the following:
Schedule of income tax rate reconciliation
|
|
2023 |
|
|
2022 |
|
US
federal income tax rate |
|
|
21 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
Computed
expected tax (benefit) - continuing operations |
|
|
648,463 |
|
|
|
(127,122) |
|
|
|
|
|
|
|
|
|
|
Net
Income (loss) before income tax - discontinued operations (1) |
|
|
83,682 |
|
|
|
252,800 |
|
US
federal income tax rate |
(1) |
|
21% |
|
|
|
21% |
|
Computed
expected tax (benefit) - discontinued operations |
(1) |
|
17,573 |
|
|
|
53,088 |
|
|
|
|
|
|
|
|
|
|
Total
computed expected tax (benefit) |
(1) |
|
666,036 |
|
|
|
(74,034) |
|
Permanent
differences and other |
|
|
(393,736) |
|
|
|
200,034 |
|
Change
in valuation |
|
|
(272,300) |
|
|
|
(126,000) |
|
Federal
income tax provision |
|
$ |
- |
|
|
$ |
- |
|
(1) |
We sold our entire
ownership interest in WCI on October 4, 2023 and as a result WCI is excluded from our continuing operations and presented as discontinued
operations. See Note 3. |
Mentor
Capital, Inc.
Notes
to Consolidated Financial Statements
December
31, 2023 and 2022
The
significant components of deferred income tax assets as of December 31, 2023 and 2022 after applying enacted corporate income tax rates
are as follows:
Schedule
of deferred tax assets
|
|
2023 |
|
|
2022 |
|
Net Operating Losses carried forward
from continuing operations |
|
$ |
1,913,000 |
|
|
$ |
1,851,100 |
|
Capital Losses carried forward |
|
|
156,600 |
|
|
|
371,200 |
|
Deferred - Other |
|
|
- |
|
|
|
62,500 |
|
Valuation allowance |
|
|
(2,069,600 |
) |
|
|
(2,284,800 |
) |
Deferred tax assets |
|
$ |
- |
|
|
$ |
- |
|
|
|
2023 |
|
|
2022 |
|
Net
Operating Losses carried forward from discontinued operations (1) |
|
$ |
- |
|
|
$ |
57,100 |
|
Capital
Losses carried forward |
|
|
- |
|
|
|
- |
|
Valuation
allowance |
|
|
- |
|
|
|
(57,100) |
|
Deferred tax assets |
|
$ |
- |
|
|
$ |
- |
|
(1) |
We sold our entire
ownership interest in WCI on October 4, 2023 and as a result WCI is excluded from our continuing operations and presented as discontinued
operations. See Note 3. |
The
Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. All tax years from 2019
to 2022 are subject to examination.
|