| FEDERAL AND STATE INCOME TAXES |
NOTE 7 — FEDERAL AND
STATE INCOME TAXES
Income tax expense consisted
of the following:
| |
|
Year
Ended
December 31,
2020 |
|
Year
Ended
December 31,
2019 |
|
| State income tax: |
|
|
|
|
|
| Current, net of refund |
|
$ |
17,800 |
|
$ |
22,514 |
|
| Federal income tax: |
|
|
|
|
|
|
|
| Deferred |
|
|
62,967 |
|
|
(186,775 |
) |
| Current |
|
|
(62,967 |
) |
|
296,330 |
|
| Income tax expense |
|
$ |
17,800 |
|
$ |
132,069 |
|
The reconciliation of income
taxes shown in the financial statements and amounts computed by applying the Federal expected tax rate of 21% for year 2020 and
2019 is as follows:
| |
|
Year
Ended
December 31,
2020 |
|
Year
Ended
December 31,
2019 |
|
| |
|
|
|
|
|
| (Loss)/income before taxes |
|
$ |
(1,194,263 |
) |
$ |
696,418 |
|
| Income taxes computed at the federal statutory
rate |
|
$ |
(250,795 |
) |
$ |
146,248 |
|
| State income and franchise tax |
|
|
17,800 |
|
|
22,514 |
|
| Permanent differences and other |
|
|
250,795 |
|
|
(36,693 |
) |
| Income tax expense |
|
$ |
17,800 |
|
$ |
132,069 |
|
The significant components
of deferred income tax assets, net are as follows:
| |
|
December
31,
2020 |
|
December
31,
2019 |
|
| |
|
|
|
|
|
| Deferred compensation cost |
|
$ |
239,036 |
|
$ |
259,068 |
|
| Depreciation and amortization |
|
|
(135,092 |
) |
|
(71,331 |
) |
| Allowance for bad debts and other |
|
|
21,330 |
|
|
504 |
|
| Deferred income tax assets, net |
|
$ |
125,274 |
|
$ |
188,241 |
|
Our U.S. federal and state
income tax returns remain open to examination for the tax years 2017 through 2020.
|