Annual report pursuant to Section 13 and 15(d)

Income tax

v3.22.4
Income tax
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income tax

Note 15. Income tax

 

The Company has not made a provision for income taxes for the year ended December 31, 2022, and 2021, since the Company has the benefit of net operating losses in these periods and the Company changed from a limited liability partnership to a C corporation during 2021.

 

Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize deferred income tax assets arising as a result of net operating losses carried forward, the Company has not recorded any deferred income tax assets as of December 31, 2022. The Company has incurred a net operating loss of $12,839,968, the net operating loss carry forwards can offset 80 percent of future taxable income and carryforward indefinitely as determined by respective tax regulating authorities. The Company’s net operating loss carry forwards may be subject to annual limitations, which could eliminate, reduce or defer the utilization of the losses because of an ownership change as defined in Section 382 of the Internal Revenue Code U.S. federal tax returns are closed by statute for years through 2014. The status of state and non-U.S. tax examinations varies due to the numerous legal entities and jurisdictions in which the Company operates.

 

A reconciliation between expected income taxes, computed at the federal income tax rate of 21% applied to the pretax accounting loss, and our blended state income tax rate of 5.5% in 2022 and 3.5% in 2021, and the income tax net expense included in the consolidated statements of operations for the year ended December 31, 2022, and 2021 is as follows:

    Year Ended     Year Ended  
    December 31,     December 31,  
    2022     2021  
             
Loss for the year   $ (12,839,968 )   $ (3,746,138 )
                 
Income tax (recovery) at statutory rate   $ (2,689,782 )     (786,700 )
State income tax expense, net of federal tax effect     (704,467 )     (131,100 )
Permanent difference and other     -       -  
Change in valuation allowance     3,394,249       917,800  
Income tax expense per books   $ -     $ -  

 

Net deferred tax assets consist of the following components as of:

 

    December 31,     December 31,  
    2022     2021  
             
Non-operating loss carryforward   $ 4,312,049     $ 917,800  
Valuation allowance     (4,312,049 )     (917,800 )
Net deferred tax asset   $ -     $ -