v3.22.2.2
INCOME TAXES
 6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 16 - INCOME TAXES

 

The provision (benefit) for income taxes for the three months ended June 30, 2022 and 2021 assumes a 21% effective tax rate for federal income taxes. A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

 

         
   Six Months Ended 
   June 30, 
   2022   2021 
         
Federal statutory income tax rate   (21.0%)   (21.0%)
           
Change in valuation allowance on net operating loss carryforwards   21.0    21.0 
           
Effective income tax rate   0.0%   0.0%

 

 

Deferred tax assets as of June 30, 2022 and December 31, 2021 are as follows:

 

   2022   2021 
         
NOL carryforwards  $7,600,000   $7,500,000 
           
Less valuation allowance   (7,600,000)   (7,500,000)
           
Deferred tax assets  $-   $- 

 

Deferred taxes are caused primarily by net operating loss carryforwards. U.S. Tax Legislation enacted in 2017 (the “TCJA”) has significantly changed certain aspects of U.S. federal income taxation. Net Operating Losses (“NOLs”) generated in 2017 and prior years can be carried forward for 20 years. NOLs generated in 2018 – 2020, as enacted by the CARES Act, can be carried forward indefinitely. However, NOLs generated in 2021 is also carried forward indefinitely but limited to 80% of taxable income.

 

For federal income tax purposes, the Company has a net operating loss carryforward of approximately $36,500,000 as of June 30, 2022, of which approximately $18,400,000 expires beginning in 2024 and $18,100,000 which can be carried forward indefinitely. For state income tax purposes, the Company has a net operating loss carryforward of approximately $18,400,000 and $17,800,000 as of June 30, 2022 in Georgia and Massachusetts, respectively, which expires beginning in 2023.

 

In addition, as of June 30, 2022, Rotmans has a net operating loss carryforward of approximately $5,100,000 for federal income tax purposes of which $1,500,000 expires beginning in 2029 and $3,600,000 can be carried forward indefinitely. Rotmans has a state operating loss carryforward of approximately $4,200,000 which expires beginning in 2022.

 

Pursuant to Internal Revenue Code Section 382, the future realization of our net operating loss carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or that could occur in the future.