Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.21.1
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

6. Income Taxes

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2020 and 2019 are summarized below.

 

    December 31,  
    2020     2019  
Start-up and organization costs   $ 5,000     $ 10,000  
Research credits     390,000       359,000  
Stock-based compensation     1,107,000       799,000  
Net operating loss carryforwards     5,477,000       4,879,000  
Total deferred tax assets     6,979,000       6,047,000  
Valuation allowance     (6,979,000 )     (6,047,000 )
Net deferred tax assets   $     $  

 

In assessing the potential 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 be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2020 and 2019, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates.

 

No federal tax provision has been provided for the years ended December 31, 2020 and 2019 due to the losses incurred during such periods. The reconciliation below presents the difference between the income tax rate computed by applying the U.S. federal statutory rate and the effective tax rate for the years ended December 31, 2020 and 2019.

 

   

Years Ended

December 31,

 
    2020     2019  
             
U. S. federal statutory tax rate     (21.0 )%     (21.0 )%
State income taxes, net of federal tax benefit     (6.0 )%     (6.0 )%
Expirations related to stock-based compensation     0.5 %     1.2 %
Adjustment to deferred tax asset     (0.8 )%     (0.3 )%
Change in valuation allowance     27.3 %     26.1 %
Effective tax rate     0.0 %     0.0 %

 

At December 31, 2020, the Company has available net operating loss carryforwards for federal and state income tax purposes of approximately $19,188,000 and $20,087,000, respectively. Federal net operating losses, if not utilized earlier, expire through 2040. The state net operating loss carryovers were incurred solely in the state of New York. New York tax law requires New York net operating loss carryovers from years prior to 2015 to be converted, by applying a formula, into a Prior Net Operating Loss Conversion (PNOLC) subtraction pool. The Company may utilize up to 1/10 of the PNOLC subtraction pool, or $928,313, each year. Unutilized PNOLC amounts carry forward to succeeding years until they expire in 2035. In addition, the full New York net operating losses incurred in post-2015 tax years may be utilized in future tax years. Post-2015 New York net operating losses expire through 2040. As the Company’s net operating losses have yet to be utilized, all previous tax years since 2006 remain open to examination by Federal authorities and other jurisdictions in which the Company currently operates or has operated in the past.