Income Tax

9 Months Ended

Sep. 30, 2024

Income Tax [Abstract]

INCOME TAX

NOTE 14 – INCOME TAX

There was no income tax expense reflected in the results of operations for the years ended December 31, 2023 and 2022 because the Company incurred a net loss for tax purposes.

As of December 31, 2023 and 2022, the Company had federal and state net operating loss carry forwards of $12,992,877 and $9,243,925, respectively which may be used to offset future taxable income. Approximately $1,696,000 will begin to expire in 2036 while $5,920,000 will not expire but will be limited in annual utilization of 80% of current year income.

The tax effects of temporary differences which give rise to deferred tax assets (liabilities) are summarized as follows:

	December 31, 2023			December 31, 2022
Deferred tax assets / (liabilities)
Net operating loss carry forward	$	3,361,000		$	2,923,000
Stock-based compensation		517,618			245,000
Accrued expenses		192,697			193,000
Net deferred tax assets		4,071,315			3,361,000
Valuation allowance		(4,071,315	)		(3,361,000	)
Net deferred tax assets, net of valuation allowance	$	-		$	-

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability.

Reconciliation of the statutory federal income tax to the Company’s effective income tax rate for the years ended December 31, 2023 and 2022:

	December 31, 2023			December 31, 2022
Statutory federal income tax rate		21.0	%		21.00	%
State tax, net of federal benefit		15.29	%		15.29	%
Permanent differences		2.50	%		2.50	%
Valuation allowance		(38.79	)%		(38.79	)%
Effective rate		-	%		-	%

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 may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.

On March 27, 2020, the US government signed the CARES Act into law, a $2 trillion relief package to provide support to individuals, businesses, and government organizations during the COVID-19 pandemic. During 2020, $91,035 in PPP relief was received under the CARES Act and was forgiven free of taxation in 2021.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2023 and 2022 the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2023 and 2022. The Company did not recognize any interest or penalties during fiscal 2023 or 2022 related to unrecognized tax benefits.

For the years ended December 31, 2023 and 2022, the net increase in valuation allowance was approximately $710,315 and $1,777,000, respectively.

Tax years 2018-2021 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.