INCOME TAXES
 12 Months Ended
Dec. 31, 2022
INCOME TAXES  
INCOME TAXES

NOTE 11 – INCOME TAXES

 

The components of income tax expense for the years ended December 31, 2022, and 2021 consist of the following:

 

 

 

2022

 

 

2021

 

Federal tax statutory rate

 

 

21.0%

 

 

21.0%

Permanent differences

 

 

(6.8 )%

 

 

(0.2 )%

 

 

 

 

 

 

 

 

 

Temporary differences

 

 

(5.9 )%

 

 

(2.9 )%

Valuation allowance

 

 

(8.3 )%

 

 

(17.9 )%

Effective rate

 

 

0%

 

 

0%

Significant components of the Company’s estimated deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows:

 

 

 

2022

 

 

2021

 

Deferred tax assets:

 

 

 

 

 

 

Net operating loss carryforwards

 

$3,700,000

 

 

$2,440,000

 

Temporary differences

 

 

(520,000)

 

 

(160,000)

 

 

 

 

 

 

 

 

 

Total deferred tax asset

 

 

3,180,000

 

 

 

2,280,000

 

 

 

 

 

 

 

 

 

 

Valuation allowance

 

 

(3,180,000)

 

 

(2,280,000)

 

 

$-

 

 

$-

 

 

The Company has net operating losses (“NOLs”) as of December 31, 2022, of approximately $18,000,000 for federal tax purposes, which will expire in varying amounts through 2040. The Company may be able to utilize its NOLs to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carry-forwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is possible that the utilization of the NOLs could be substantially limited. The Company has no tax provision for the years ended December 31, 2022 and 2021 due to the net losses and full valuation allowances against net deferred tax assets.