Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. 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, 2019		December 31, 2018
Deferred tax assets:
Net operating loss carryforwards	$	762,000	$	586,000
Tax Credits		286,000		-
Deferred revenue		58,000		989,000
Non-qualified stock option expense		136,000		147,000
Investment in That’s Eatertainment (TEC), a related party		51,000		39,000
Reserves, accruals and other		231,000		160,000
Accumulated depreciation and amortization		268,000		479,000
Total deferred tax assets		1,792,000		2,400,000
Less: Valuation allowance		-		-
Net deferred tax assets	$	1,792,000	$	2,400,000

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 $1.3 million of federal net operating loss carry-forwards as of December 31, 2019, that are available to offset future taxable income that expire in various years through 2039.

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

	December 31, 2019			December 31, 2018
Current	$	(162,000	)	$	-
Deferred		608,000			310,000
Change in valuation allowance		-			-
Provision for income taxes	$	446,000		$	310,000

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, 2019					December 31, 2018
	$		%			$		%
Federal income tax expense at the statutory rate	$	78,000		21.0	%	$	237,000		21.0	%
State income taxes, net of federal benefit		20,000		5.4	%		62,000		5.5	%
Permanent differences		79,665		21.4	%		73,000		6.5	%
Tax return true-ups and other		268,335		72.2	%		(62,000)		5.5	%
Change in federal income tax rates		-		0.0	%		-		0.0	%
Change in valuation allowance		-		0.0	%		-		0.0	%
Provision for income taxes	$	446,000		120.1	%	$	310,000		27.5	%

Provision for income taxes increased in 2019 from a true-up of the deferred tax asset and temporary timing differences in deferred revenue, reserves, depreciation and amortization, and net operating loss carryforward, offset by an adjustment for taxes prepaid and refunded from prior year tax over payments.