|12 Months Ended|
Dec. 31, 2020
|Income Tax Disclosure [Abstract]|
Note 11. Income Taxes
By virtue of a merger of the limited liability company into a corporation, the Company became a corporation during 2018.
The significant items comprising the Company’s net deferred taxes as of December 31, 2020 and 2019 are as follows:
The components of the provision for (benefit from) income taxes consist of the following:
The provision for (benefit from) income taxes varies from the amount computed by applying the statutory rate for reasons summarized below:
As of December 31, 2020 and 2019, the Company had federal net operating loss carryforwards of approximately $32.6 million and $28.3 million, respectively, available to offset future taxable income. As of December 31, 2020 and 2019, the Company had state loss carry-forwards of approximately $15.1 million and $10.8, respectively. Future utilization of net operating losses may be limited due to potential ownership changes under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). The federal net operating loss carryforwards can be carried forward indefinitely and state loss carryforwards begin to expire in 2039.
The valuation allowance as of December 31, 2020 and 2019 was $8,893,457 and $7,088,189, respectively. The net change in valuation allowance for the years ended December 31, 2020 and 2019 was an increase of $1,805,268 and $7,014,399, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on consideration of these items, management has determined that enough uncertainty exists relative to the realization of the deferred income tax asset balances to warrant the application of a full valuation allowance as of December 31, 2020 and 2019.
The Company had no unrecognized tax benefits during 2020 or 2019. By statute, all tax years are open to examination by the major taxing jurisdictions to which the Company is subject.
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef