Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

NOTE 11 – INCOME TAXES


The recognized deferred tax asset is based upon the expected utilization of its benefit from future taxable income. The Company has federal net operating loss (“NOL”) carryforwards of approximately $6,177,000 as of June 30, 2020, which is subject to limitations under Section 382 of the Internal Revenue Code. These carryforward losses are available to offset future taxable income and begin to expire in the year 2024 to 2033. 


The foregoing amounts are management’s estimates and the actual results could differ from those estimates. Future profitability in this competitive industry depends on continually obtaining and fulfilling new profitable sales agreements and modifying products.  The inability to obtain new profitable contracts could reduce estimates of future profitability, which could affect the Company’s ability to realize the deferred tax assets.


Income tax provision (benefit) from continuing operations:


   

Six Months Ended

 
   

June 30,

   

June 30,

 
   

2020

   

2019

 

Current:

               

Federal

  $ 139,425     $ -  

State and local

    33,973       4,089  
                 

Total current tax provision

    173,398       4,089  
                 

Deferred:

               

Federal

    (186,780

)

    (130,774 )

State and local

    (65,000

)

    (2,000 )
                 

Total deferred tax provision (benefit)

    (251,780

)

    (132,774 )
                 

Total provision (benefit)

  $ (78,382

)

  $ (128,685 )

For the six months ended June 30, 2020, the Company’s Federal and State provision requirements were calculated based on the estimated tax rate. The Federal effective rate is higher than the statutory rate primarily due to Incentive Stock Options (ISO) and 50% of meals, 100% entertainment expense which are not tax deductible. The benefit from continuing operations for the six months ended June 30, 2020 was $78,382. The effective tax rate consists primarily of the 21% federal statutory tax rate and a blended 5% state and local tax rate.