Quarterly report pursuant to Section 13 or 15(d)

Income Taxes (Tables)

v3.21.2
Income Taxes (Tables)
9 Months Ended
Sep. 30, 2021
Income Tax Disclosure [Abstract]  
Components of Provision for Income Taxes

Significant components of the tax expense (benefit) recognized in the accompanying consolidated statements of operations for the Three and Nine Months ended September 30, 2021 and September 30, 2020 are as follows:

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2021

 

 

September 30, 2020

 

 

 

September 30, 2021

 

 

September 30, 2020

 

Current tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

(1,159,524

)

 

$

(712,977

)

 

 

$

2,078,774

 

 

$

(861,234

)

State

 

 

(321,397

)

 

 

(147,519

)

 

 

 

348,622

 

 

 

(178,194

)

Total current tax benefit

 

 

(1,480,921

)

 

 

(860,496

)

 

 

 

2,427,396

 

 

 

(1,039,428

)

Deferred tax expense

 

 

12,619

 

 

 

53,114

 

 

 

 

34,614

 

 

 

92,371

 

Valuation allowance (expense)

 

 

1,480,921

 

 

 

807,382

 

 

 

 

(2,432,127

)

 

 

947,057

 

Income tax (reduction) benefit

 

$

12,619

 

 

$

-

 

 

 

$

29,883

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Schedule of Reconciliation of Tax Provision with Expected Provision

The reconciliation of the income tax computed at the combined federal and state statutory rate of 24.5% for the Three and Nine Months ended September 30, 2021 and 2020 to the income tax benefit is as follows:

 

 

 

Three Months Ended

 

Three Months Ended

 

 

Nine Months Ended

 

Nine Months Ended

 

 

 

September 30, 2021

 

September 30, 2020

 

 

September 30, 2021

 

September 30, 2020

 

Benefit on net loss

 

$

(1,469,827

)

26.9%

 

$

(808,436

)

29.4%

 

 

$

2,458,947

 

24.5%

 

$

(948,111

)

25.3%

 

Nondeductible expenses

 

 

1,525

 

0.0%

 

 

1,054

 

0.0%

 

 

 

3,063

 

0.0%

 

 

1,054

 

0.0%

 

Valuation allowance (expense)

 

 

1,480,921

 

(27.1)%

 

 

807,382

 

(29.3)%

 

 

 

(2,432,127

)

(24.3)%

 

 

947,057

 

(25.3)%

 

Other items

 

 

-

 

0.0%

 

 

-

 

0.0%

 

 

 

-

 

0.0%

 

 

-

 

0.0%

 

Tax benefit/effective rate

 

$

12,619

 

(0.20)%

 

$

-

 

0.1%

 

 

$

29,883

 

0.2%

 

$

-

 

(—)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of Deferred Tax Assets and Liabilities

The significant components of the Company’s deferred tax liabilities and assets as of September 30, 2021 and December 31, 2020 are as follows: 

 

 

 

As of September 30, 2021

 

 

As of December 31, 2020

(Audited)

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Tax expense for internally developed software

 

$

-

 

 

$

(1,814

)

Tax depreciation in excess of book

 

 

-

 

 

 

(2,916

)

Total deferred tax liabilities

 

 

-

 

 

 

(4,730

)

Deferred tax assets:

 

 

 

 

 

 

 

 

Loss carryforwards

 

 

1,359,074

 

 

 

3,913,579

 

Step up in basis at contribution to C-Corp

 

 

487,692

 

 

 

511,052

 

Stock option expense

 

 

120,820

 

 

 

124,876

 

Step up in basis - purchase of non-controlling interest

 

 

44,956

 

 

 

49,950

 

Allowance for credit losses

 

 

32,378

 

 

 

33,466

 

Accrued liabilities

 

 

-

 

 

 

20,573

 

Total deferred tax asset

 

 

2,044,920

 

 

 

4,653,496

 

Tax rate change

 

 

151,296

 

 

 

-

 

Valuation allowance

 

 

(2,226,099

)

 

 

(4,658,226

)

Net deferred tax asset (liability)

 

$

(29,883

)

 

$

-