TAXES

3 Months Ended

Mar. 31, 2021

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 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 months ended March 31, 2021 and 2020 consists of the following:


	For the Three Months Ended
	March 31, 2021		March 31, 2020
Current income taxes:
Federal	$	963,860	$	359,600
State	222,281		89,660
Current income taxes	1,186,141		449,260
Deferred income taxes (benefit):
Federal	(425,208)		(723,342)
State	(153,726)		(208,129)
Deferred income taxes (benefit)	(578,934)		(931,471)
Total provision (benefit) for income taxes	$	607,207	$	(482,211)

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


	As of March 31, 2021		As of December 31, 2020
Deferred tax assets:
Allowance for doubtful accounts	$	421,751	$	443,151
Inventories	538,152		481,016
Federal net operating loss	330,248		101,828
State net operating loss	10,851		257,490
Fair value change in interest rate swap contracts	38,023		244,622
Accrued expenses	198,188		268,813
Total deferred tax assets	1,537,213		1,796,920
Deferred tax liabilities:
Property and equipment	(2,526,291)		(2,660,874)
Intangibles assets	(44,757,214)		(45,461,272)
Total deferred tax liabilities	(47,283,505)		(48,122,146)
Net deferred tax liabilities	$	(45,746,292)	$	(46,325,226)

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


	As of March 31, 2021		As of December 31, 2020
Deferred tax assets	$	45,837	$	57,478
Deferred tax liabilities	(45,792,129)		(46,382,704)
Net deferred tax liabilities	$	(45,746,292)	$	(46,325,226)

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


	For the Three Months Ended
	March 31, 2021		March 31, 2020
Federal statutory tax rate	21.0	%	21.0	%
State statutory tax rate	2.2	%	—	%
Impact of goodwill impairment loss - permanent difference	—	%	(20.8)	%
U.S. permanent difference	0.1	%	—	%
Others	1.7	%	—	%
Effective tax rate	25.0	%	0.2	%

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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