Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.21.1
Income Taxes
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES
7. 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 %