Duos Technologies Group, Inc. General form of registration statement for all companies including face-amount certificate companies

General form of registration statement for all companies including face-amount certificate companies

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2020

NOTE 12  INCOME TAXES

The Company maintains deferred tax assets and liabilities that 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. The deferred tax assets at December 31, 2020 and 2019 consist of net operating loss carryforwards and differences in the book basis and tax basis of intangible assets.

The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2020 and 2019 were as follows:



	Years Ended December 31,
	2020			2019
Income tax benefit at U.S. statutory rate of 21%	$	(1,416,961	)	$	(518,885	)
State income taxes		(242,908	)		(88,952	)
Non-deductible expenses		135,152			26,943
Change in valuation allowance		1,524,717			580,894
Total provision for income tax	$			$

The Companys approximate net deferred tax assets as of December 31, 2020 and 2019 were as follows:



	December 31,
	2020			2019
Deferred Tax Assets:
Net operating loss carryforward	$	6,807,482		$	5,224,941
Intangible assets		31,841			53,995
Allowance for bad debt					35,670
		6,839,323			5,314,606
Valuation allowance		(6,839,323	)		(5,314,606	)
Net deferred tax assets	$			$

The gross operating loss carryforward was approximately $27,672,692 and $21,403,666 at December 31, 2020 and 2019, respectively. The Company provided a valuation allowance equal to the deferred income tax assets for the years ended December 31, 2020 and 2019 because it was not known whether future taxable income will be sufficient to utilize the loss carryforward and other deferred tax assets. The increase in the valuation allowance was $1,524,717 in 2020.

The potential tax benefit arising from the net operating loss carryforward of $4,357,876 from the period prior to January 1, 2018 will expire in 2037. The potential tax benefit arising from the net operating loss carryforward of $2,409,245 from the period following the Acts effective date can be carried forward indefinitely within the annual usage limitations.

Additionally, the future utilization of the net operating loss carryforward to offset future taxable income is subject to an annual limitation as a result of ownership or business changes that may occur in the future. The Company has not conducted a study to determine the limitations on the utilization of these net operating loss carryforwards. If necessary, the deferred tax assets will be reduced by any carryforward that may not be utilized or expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Companys 2019, 2018 and 2017 Corporate Income Tax Returns are subject to Internal Revenue Service examination.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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