TAXES

6 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

TAXES

TAXES

Corporate Income Taxes (“CIT”)

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”), which significantly changed U.S. tax law. The Act lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while also imposing a deemed repatriation tax on deferred foreign income. The Act also created a new minimum tax on certain future foreign earnings. The Company expects the new federal income tax rate will significantly lower the Company’s income tax expenses going forward. The Company does not expect the repatriation tax and new minimum tax on certain future foreign earnings to have any impact on the Company’s operations since it currently has no foreign income and does not expect to generate any foreign income in the future.

(i)The provision for income taxes of the Company for the three and six months ended June 30, 2020 and 2019 consists of the following:

	For the Three Months Ended				For the Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Current income taxes:
Federal	$	40,618	$	531,491	$	400,218	$	923,974
State	35,646		142,860		125,306		282,248
Current income taxes	76,264		674,351		525,524		1,206,222
Deferred income taxes (benefit):
Federal	(1,195,341)		(161,190)		(1,918,683)		(58,129)
State	(370,228)		(52,410)		(578,357)		(39,703)
Deferred income taxes (benefit)	(1,565,569)		(213,600)		(2,497,040)		(97,832)
Total provision (benefit) for income taxes	$	(1,489,305)	$	460,751	$	(1,971,516)	$	1,108,390

(ii)Temporary differences and carryforwards of the Company that created significant deferred tax assets and liabilities are as follows:

	As of June 30, 2020		As of December 31, 2019
Deferred tax assets:
Allowance for doubtful accounts	$	826,586	$	373,438
Inventories	532,276		594,628
Federal net operating loss	228,637		228,637
State net operating loss	80,673		80,514
Fair value change in interest rate swap contracts	338,131		—
Accrued expenses	133,896		80,100
Total deferred tax assets	2,140,198		1,357,317
Deferred tax liabilities:
Property and equipment	(2,995,155)		(3,270,536)
Intangibles assets	(48,889,055)		(50,327,833)
Total deferred tax liabilities	(51,884,210)		(53,598,369)
Net deferred tax liabilities	$	(49,744,012)	$	(52,241,052)

The net deferred tax liabilities presented in the Company's unaudited condensed consolidated balance sheets are as follows:

	As of June 30, 2020		As of December 31, 2019
Deferred tax assets	$	319,320	$	78,993
Deferred tax liabilities	(50,063,332)		(52,320,045)
Net deferred tax liabilities	$	(49,744,012)	$	(52,241,052)

(iii)Reconciliations of the statutory income tax rate to the effective income tax rate are as follows:

	For the Six Months Ended
	June 30, 2020		June 30, 2019
Federal statutory tax rate	21.0	%	21.0	%
State statutory tax rate	0.1	%	5.0	%
Impact of goodwill impairment loss – permanent difference	(20.5)	%	2.0	%
Effective tax rate	0.6	%	28.0	%