Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes [Abstract]

INCOME TAXES

NOTE 13 – INCOME TAXES

The provision for federal and state income taxes for the years ended is as follows:

		2023		2022
Current provision:
Federal	$	-	$	-
State		-		-
Deferred provision (benefit):
Federal		-		-
State		-		-
Total Deferred		-		-
Total provision for income taxes	$	-	$	-

Realization of future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching conclusion as to the valuation allowance for financial reporting purposes and has recorded a full valuation allowance against the deferred tax asset.

The income tax effect of temporary differences comprising the deferred tax assets and deferred tax liabilities is a result of the following at December 31:

	2023			2022
Deferred tax assets:
Net operating loss	$	4,803,000		$	3,170,457
Fixed assets		(98,000	)		(51,573	)
Lease		18,000			52,340
Loss on contingency		(218,000	)		(193,398	)
Intangible assets		(1,630,000	)		1,663,044
Research and Development		178,000			64,189
Stock based compensation		2,000			95,908
Donations		5,000			-
Accrual to cash conversion		2,578,000			1,099,403
Total		5,638,000			5,900,370
Valuation allowance		(5,638,000	)		(5,900,370	)
Net	$	-		$	-

The income tax provision differs from the expense that would result from applying federal statutory rates to income before income taxes because the Company is subject to state income taxes, deferred income taxes are based on average tax rates and a portion of gifts and meals and entertainment are not tax deductible. A valuation allowance has been provided to reduce deferred tax assets to an amount that is more likely than not to be realized.

Prior to the share exchange, Munn Works, LLC was taxed as a single member Limited Liability Company for federal and state income tax purposes. As such, the Company will not pay income taxes for earnings prior to the share exchange, as any income or loss will be included in the tax returns of the individual member. Accordingly, no provision is made for income taxes in the financial statements prior to the share exchange.

Effective tax rates differ from the federal statutory rate of 21% applied to income before provision for income taxes due to the following:

	2023			2022
Federal statutory rate times financial statement income	$	(2,580,406	)	$	(3,551,627	)
Permanent tax basis differences		(987,636	)		(2,268	)
Deferred true up		352,315			159,849
State taxes, net		(498,676	)		(158,480	)
Change in Valuation allowance		(675,416	)		3,519,246
Intangibles acquired		4,433,135			-
Other		(43,316	)		33,280
Total provision for income taxes	$	-		$	-

The Company has available net operating loss approximately $28,790,347 for tax purposes to offset future taxable income. Pursuant to the Tax Reform Act of 1986, annual utilization of the Company’s net operating loss and contribution carryforwards may be limited if a cumulative change in ownership of more than 50% is deemed to occur within any three-year period. The tax years 2019 through 2022 remain open to examination by federal agencies and other jurisdictions in which it operates.