Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

9. Income Taxes

As of December 31, 2023 and 2022, our Company had estimated federal net operating loss carryforwards of approximately $211,0000 and $– and estimated state net operating loss carryforwards of approximately $1,791,000 and $1,657,800. The federal net operating loss carryforwards do not expire but are limited to 80% of each subsequent year’s net income. The state net operating loss carryforwards expire in 20 years, starting in 2024. State income taxes in 2022 resulted from limitations placed on net operating loss deductions by the Commonwealth of Pennsylvania. There was no provision for federal and state income taxes for the year ended December 31, 2023 due to the net loss. The utilization of these NOL’s to reduce future income taxes will depend on the generation of sufficient taxable income prior to their expiration. There were no material temporary differences for the year ended December 31, 2022. Our Company has established a 100% valuation allowance of $592,400 and $143,400 at December 31, 2023 and 2022, respectively, for the deferred tax assets due to the uncertainty of their realization. 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 not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses and temporary differences become deductible.  Management considered projected future taxable income and tax planning strategies in making this assessment.  

The components for federal and state income tax expense (benefit) are:

	Year ended December 31,
	2023			2022
Current federal tax benefit	$	(166,700	)	$	167,800
Current state tax benefit		(16,000	)		126,700
Deferred tax benefit		(389,000	)		—
Change in valuation allowance		449,000			—
	$	(122,700	)	$	294,500

The reconciliation of the statutory federal rate to our Company’s effective tax rate follows:

	2023						2022
	Amount			%			Amount			%
Income tax expense (benefit) at U.S. federal income tax rate	$	(327,300	)		(21	)	$	442,600			21
State tax net of federal tax effect		(121,900	)		(8	)		166,300			8
Tax accrual adjustment		(122,500	)		(8	)		—			—
Change in valuation allowance		449,000			29			—			—
Utilization of operating losses		—			—			(314,400	)		(15	)
	$	(122,700	)		(8	)	$	294,500			14

The components of deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows:

	2023			2022
Deferred tax asset for NOL carryforwards	$	203,400		$	143,400
Stock-based compensation		389,000
Valuation allowance		(592,400	)		(143,400	)
Net	$	—		$	—

Our Company follows FASB ASC 740.10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.

Our Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of comprehensive income. As of January 1, 2023, our Company had no unrecognized tax benefits and no charge during 2023, and accordingly, our Company did not recognize any interest or penalties during 2023 related to unrecognized tax benefits. There is no accrual for uncertain tax positions as of December 31, 2023.

The Company files U.S. income tax returns and a state income tax return. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2020 and thereafter are subject to examination by the relevant taxing authorities.