|12 Months Ended|
Dec. 31, 2019
|Income Tax Disclosure [Abstract]|
Note 6 — Income Taxes
Income tax (benefit) expense for respective periods noted is as follows:
The reconciliation of the federal statutory income tax rate to the effective income tax rate for the respective period noted is as follows:
The tax effects of temporary differences which give rise to the net deferred tax assets for the respective period noted is as follows:
Deferred tax assets and deferred tax liabilities resulting from temporary differences are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of the change in the tax rate is recognized as income or expense in the period the change in tax rate is enacted.
As required by FASB ASC Topic 740, Income Taxes” (“ASC 740), a “more-likely-than-not” criterion is applied when assessing the estimated realization of deferred tax assets through their utilization to reduce future taxable income, or with respect to a deferred tax asset for tax credit carryforward, to reduce future tax expense. A valuation allowance is established, when necessary, to reduce deferred tax assets, net of deferred tax liabilities, when the assessment indicates it is more-likely-than-not, the full or partial amount of the net deferred tax asset will not be realized. Accordingly, the Company evaluated the positive and negative evidence bearing upon the estimated realizability of the net deferred tax assets, and based on the Company’s history of operating losses, concluded it is more-likely-than-not the deferred tax assets will not be realized, and therefore recognized a valuation allowance reserve equal to the full amount of the deferred tax assets, net of deferred tax liabilities, as of December 31, 2019 and 2018.
The Company has total estimated federal and state net operating loss (“NOL”) carryforward of approximately $40 million and $27.4 million as of December 31, 2019 and 2018, respectively, which is available to reduce future taxable income, of which approximately $13.8 million begin to expire in 2035, and approximately $26.2 million which do not have an expiration date. The Company has not yet conducted a formal analysis and the NOL carryforward may be subject-to limitation under U.S. Internal Revenue Code (“IRC”) Section 382, provided there was a greater then 50% ownership change, as computed under such IRC Section 382. The State and Local NOL carryforwards of approximately $40.0 million begin to expire in 2035. The Company has total estimated research and development (“R&D”) tax credit carryforward of approximately $0.4 million as of December 31, 2019 which are available to reduce future tax expense, and begin to expire in 2035.
The Company files income tax returns in the United States in federal and applicable state and local jurisdictions. The Company’s tax filings for the years 2016 and thereafter each remain subject to examination by taxing authorities. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. The Company has not recognized any penalties or interest related to its income tax provision.
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://fasb.org/us-gaap/role/ref/legacyRef