INCOME TAXES |
The provision (benefit) for
income taxes for the years ended December 31, 2020 and 2019 consisted of the following:
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
Income Tax Expense (benefit) |
|
|
|
|
|
|
Current federal tax expense |
|
|
|
|
|
|
Federal |
|
$ |
1,732,230 |
|
|
$ |
479,000 |
|
State |
|
|
768,231 |
|
|
|
- |
|
Deferred tax (benefit) |
|
|
|
|
|
|
|
|
Federal |
|
$ |
1,705,540 |
|
|
$ |
(479,000 |
) |
State |
|
|
226,590 |
|
|
|
- |
|
Valuation allowance |
|
|
(1,181,700 |
) |
|
|
|
|
Total |
|
$ |
3,250,891 |
|
|
$ |
- |
|
A summary of deferred tax assets
and liabilities as of December 31, 2020 and 2019 is as follows:
|
|
Year Ended |
|
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
Deferred tax assets: |
|
|
|
|
|
|
Net operating losses |
|
$ |
- |
|
|
$ |
1,033,300 |
|
Deferred right to use lease liabilities |
|
|
3,248,501 |
|
|
|
1,671,700 |
|
Stock based compensation |
|
|
756,789 |
|
|
|
354,800 |
|
Inventory reserves |
|
|
235,612 |
|
|
|
- |
|
Warranty reserves |
|
|
146,472 |
|
|
|
- |
|
Accruals and other |
|
|
180,345 |
|
|
|
160,200 |
|
|
|
|
4,567,719 |
|
|
|
3,220,000 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Deferred right to use lease assets |
|
|
(3,146,758 |
) |
|
|
(1,678,300 |
) |
Accumulated depreciation and amortization |
|
$ |
(2,171,391 |
) |
|
$ |
(360,000 |
) |
|
|
|
(5,318,149 |
) |
|
|
2,038,300 |
|
Gross deferred tax asset (liability) |
|
|
(750,430 |
) |
|
|
1,181,700 |
|
Valuation Allowance |
|
|
- |
|
|
|
(1,181,700 |
) |
Deferred tax asset (liability), net |
|
$ |
(750,430 |
) |
|
$ |
- |
|
We recorded a valuation allowance
against all of our deferred tax assets as of December 31, 2019. Given our current earnings and anticipated future earnings, we
believe that there was sufficient positive evidence available that allowed us to reach the conclusion that the valuation allowance
will no longer be needed as of December 31, 2020. Release of the valuation allowance in 2020 resulted in the recognition of certain
deferred tax assets and a decrease to income tax expense for the period the release is recorded.
The differences between the
U.S. Federal statutory income tax rate and the Company's effective tax rate were as follows for the years ended December 31,
2020 and 2019:
|
|
Years Ended December 31, |
|
|
|
2020 |
|
|
2019 |
|
Federal statutory tax rate |
|
|
21 |
% |
|
|
21 |
% |
State and local income taxes (net of federal tax benefit) |
|
|
6 |
% |
|
|
4 |
% |
|
|
|
27 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
Other |
|
|
6 |
% |
|
|
- |
|
Non-deductible compensation |
|
|
3 |
% |
|
|
- |
|
Incentive stock options |
|
|
4 |
% |
|
|
|
|
Basis adjustments |
|
|
12 |
% |
|
|
- |
|
Valuation allowance |
|
|
(14 |
)% |
|
|
(25 |
)% |
|
|
|
38 |
% |
|
|
0 |
% |
|