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TAXES
12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
TAXES

NOTE 8—TAXES

 

The following table sets forth a reconciliation of the statutory federal income tax for the years ended December 31, 2022 and 2021.

 

   2022   2021 
         
Income (loss) before income taxes  $(744,279)  $(1,021,530)
           
Income tax expense (benefit) computed at statutory rates  $(156,299)  $(214,521)
Permanent differences, nondeductible expenses   10,439    10,484 
Increase (decrease) in valuation allowance   (189,914)   (75,989)
State and Local Taxes   3,003     
Other adjustment   369,680    227,752 
Deferred True-Up   (33,082)   48,276 
ASC 842 lease standard adoption       3,998 
Tax provision  $3,827   $ 
           
Total provision          
Foreign  $   $ 
Total provision (benefit)  $3,827   $ 

 

At December 31, 2022 the Company has a federal tax loss carry forward of $11,889,216 and a foreign tax credit carry forward of $27,745, both of which have been fully reserved.

 

The tax effects of the temporary differences between financial statement income and taxable income are recognized as a deferred tax asset and liabilities. Significant components of the deferred tax asset and liability as of December 31, 2022 and 2021 are set out below.

 

   2022   2021 
Non-Current Deferred tax assets:          
Net operating loss carry forward  $11,912,710   $11,814,489 
Foreign tax credit carry forward   27,745    394,745 
Deferred state tax        
Stock compensation   425,860    433,104 
Book in excess of tax depreciation, depletion and capitalization methods on oil and gas properties   (3,458)   (38,124)
Other   (174,401)   (225,368)
ASC 842 lease standard – building lease   

(4

)   (481)
Pass-through investment   

     
Total Non-Current Deferred tax assets   12,188,452    12,378,366 
Valuation Allowance   

(12,188,452

)   (12,378,366)
Net deferred tax asset  $   $ 

 

Schedule of Net Operating Loss Carryforwards

 

The Company is currently subject to a three-year statute of limitation for federal tax purposes and, in general, three to four-year statute of limitation for state tax purposes. State NOL expiration will occur beginning in 2033 and Federal NOL expiration will begin in 2032.

 

Under the Tax Cuts and Jobs Act of 2017, net operating losses incurred for tax years beginning after December 31, 2017 will have no expiration date but utilization will be limited to 80% of taxable income. For losses generated prior to January 1, 2018, there will be no limitation on the utilization, but there is an expiration on the carryforward of 20 years for federal tax purposes.

 

The provisions were subsequently amended further under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020. The CARES Act amended the net operating loss provisions in the 2017 Tax Cuts and Jobs Act (“TCJA”) and allows for the carryback of NOL’s arising in the taxable years ending December 31, 2017 and before January 1, 2021, to each of the five taxable years preceding the taxable year of the loss. Additionally, the 80% limitation related to application of NOL’s towards current federal taxable income has been removed for taxable years prior to January 1, 2021; thereby allowing 100% of the NOL to be applied to federal taxable income.

 

To the best of the Company’s knowledge, Hupecol Meta has made all requisite filings relative to its operations, including those in Colombia, and that there are no known or expected tax issues, payments due, or judgments related to Hupecol Meta that would adversely impact the Company’s cost method investment therein.