Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

The Company accounts for its deferred tax assets and liabilities, including excess tax benefits of share-based payments, based on the tax ordering of deductions to be used on its tax returns. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities is as follows:

	December 31,		December 31,
	2018		2017
Deferred tax assets:
Net operating loss carryforwards	$	586,000	$	513,000
Deferred revenue		989,000		1,033,000
Non-qualified stock option expense		147,000		410,000
Investment in That’s Eatertainment (f/k/a MREC), a related party		39,000		28,000
Reserves, accruals and other		160,000		93,000
Tax intangible assets and accumulated depreciation/amortization		479,000		633,000
Total deferred tax assets		2,400,000		2,710,000
Less: Valuation allowance		-		-
Net deferred tax assets	$	2,400,000	$	2,710,000

Prior to the year ended December 31, 2017, the Company maintained a valuation allowance equal to the potential benefit of the net deferred tax assets as it was more likely than not that such assets would not be realized. During the year ended December 31, 2017, the Company re-evaluated the realization of its net deferred tax assets and determined that such assets were likely to be fully realized. As such, during the year ended December 31, 2017, the Company reversed its previously recognized valuation allowance of $4,425,000 and recorded a related income tax benefit of $2,710,000.

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017. The Act reduces the U.S federal corporate tax rate from 35% to 21%. Accordingly, the Company has modified the value of the deferred tax assets and liabilities, including the net operating loss carryforward, at December 31, 2017. Prior to enactment of the new tax reform, the Company had total net deferred tax assets of $4,086,910 at December 31, 2017. Taking the new tax reform into consideration, the total net deferred tax assets was $2,710,000 at December 31, 2017.

Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses has not occurred. The Company believes it has approximately $2.4 million of federal net operating loss carry-forwards, as of December 31, 2018, that are available to offset future taxable income that expire in various years through 2034.

Significant components of the (provision) benefit for income tax as follows:

	December 31,		December 31,
	2018		2017
Current	$	-	$	205,000
Deferred		310,000		1,714,000
Change in valuation allowance		-		(4,425,000	)
Provision for income taxes	$	310,000	$	(2,506,000	)

The Company is subject to federal and state taxes. A reconciliation of the Company’s effective income tax rate to the federal statutory rate is as follows:

	December 31,			December 31,
	2018			2017
Federal income tax expense at the statutory rate	$	237,000		$	257,000
State income taxes, net of federal benefit		62,000			205,000
Permanent differences		72,932			20,000
Tax return true-ups and other		(61,932	)		61,000
Change in federal income tax rates		-			1,376,000
Change in valuation allowance		-			(4,425,000	)
Provision for income taxes	$	310,000		$	(2,506,000)