Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

5. INCOME TAXES

The Company uses the Liability method in the computation of the income tax expense and the Current and Deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

The components of income tax expense (benefit) are as follows:

	Year Ended December 31,
	2020			2019
Current taxes (benefit)
Federal	$	233,700		$	259,200
State		89,000			98,700
Total taxes (benefit)	$	(322,700	)	$	(357,900	)
		Year Ended December 31,
	2020			2019
Loss before income taxes	$	(1,112,802	)	$	(1,234,476	)

The U.S. Federal statutory rate is reconciled to the effective tax rate as follows:

	Year Ended December 31,
	2020			2019
U.S. Federal Statutory Rate		21	%		21	%
State income taxes		8	%		8	%

Net income tax benefit is not recognized at this time because there is no reasonable expectation that the benefit will be realized in the future.

The Company has adopted accounting rules that prescribe when to recognize and how to measure the financial statement effects, if any, of income tax positions taken or expected on its income tax returns. These new rules require management to evaluate the likelihood that, upon examination by relevant taxing jurisdictions, those income tax positions would be sustained.

Based on that evaluation, if it were more than fifty percent (50%) probable that a material amount of income tax would be imposed at the entity level upon examination by the relevant taxing authorities, a liability would be recognized in the accompanying balance sheet along with any interest and penalties that would result from that assessment. Should any such penalties and interest be incurred, the Company’s policy would be to recognize them as operating expenses.

The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal years ended

December 31, 2020 and December 31, 2019:

	December 31, 2020			December 31, 2019
Federal Statutory Rate	$	(234,000	)	$	(260,000	)
Valuation Allowance		234,000			260,000
		-			-

For the year ended December 31, 2020 and December 31, 2019, the expected tax benefit is calculated at statutory rate of 21%.

Significant components of the Company’s deferred tax assets and liabilities were as follows for the fiscal year December 31, 2020 and December 31, 2019:

	December 31, 2020			December 31, 2019
Deferred Tax Asset:
Net Operating Loss Carry Forwards	$	8,534,000		$	8,300,000
Total Deferred Tax Assets		8,534,000			8,300,000
Deferred Tax Liabilities:
Depreciation		-			-
Deferred Revenue		-			-
Total Deferred Tax Liabilities		-			-
Net Deferred Tax Assets:		8,534,000			8,300,000
Less Valuation Allowance		(8,534,000	)		(8,300,000	)
Net Deferred Tax Assets (Liabilities)	$	-		$	-

Due to continuous losses from operations the Company has assigned a full valuation allowance against its deferred tax assets.