Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. 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 for the years ended December 31 is as follows:

	Years ending December 31,
	2021			2020
Deferred Tax Assets:
Net Operating Loss Carry Forwards	$	84,303		$	324,000
Tax Credits		1,050,595			907,000
Deferred Revenue		253,319			152,000
Stock Compensation		183,953			120,000
Investment in TEC		83,277			89,000
Reserves, Accruals, and Other		295,444			254,000
Fixed Assets		-			46,000
intangibles		252,716			-
Total Deferred Tax Assets	$	2,203,607		$	1,892,000
Deferred Tax Liabilities:
Fixed Assets	$	(529,373	)	$	-
Total Deferred Tax Liabilities	$	(529,373	)	$	-
Valuation Allowance		-			-
Net Deferred Taxes	$	1,674,234		$	1,892,000

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. The Company does not believe that such limitation of the net operating losses has occurred.

Significant components of the provision (benefit) for income tax for the years ended December 31 as follows:

	2021		2020
Current	$	28,283	$	(118,800	)
Deferred		217,767		(100,000	)
Change in valuation allowance		-		-
Provision (benefit) for income taxes	$	246,050	$	(218,800	)

The Company is subject to federal and state taxes. Reconciliations of the Company’s effective income tax rate to the federal statutory rate for the years ended December 31 are as follows:

	2021			2020
Federal income tax expense at the statutory rate		21.0	%		21.0	%
State income taxes, net of federal benefit		3.1	%		5.5	%
Research credits		-5.5	%		0.0	%
Permanent differences		0.2	%		14.8	%
True ups to tax return and other		0.0	%		-58.7	%
PPP Loan Forgiveness		-9.9	%		0.0	%
Change in valuation allowance		0.0	%		0.0	%
Provision (benefit) for income taxes		8.9	%		-17.4	%

The benefit for income taxes increased in 2020 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.