Annual report pursuant to Section 13 and 15(d)

9. INCOME TAXES

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9. INCOME TAXES
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES

Super League’s provision for income taxes consisted of the following for the years ended December 31, 2020 and 2019:

 

    2020     2019  
Current:            
Federal taxes   $ –     $ –  
State taxes                
Total current   $       $    
                 

 

    2020     2019  
Deferred:            
Federal taxes   $ 2,919,000     $ 4,098,000  
State taxes     886,000       1,374,000  
Subtotal     3,805,000       5,472,000  
Change in valuation allowance     (3,805,000 )     (5,472,000 )
Total deferred     –       –  
Provision for income taxes   $ -     $ -  

 

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following as of December 31, 2020 and 2019.

 

    2020     2019  
Deferred tax assets (liabilities):            
Net operating loss and credits   $ 20,799,000     $ 14,456,000  
Stock compensation     3,155,000       3,992,000  
Accrued liabilities     65,000       -  
Accrued interest expense     -       1,541,000  
Fixed assets and intangibles     (106,000 )     118,000  
Total deferred tax assets     23,913,000       20,107,000  
Valuation allowance     (23,913,000 )     (20,107,000 )
Total deferred tax assets, net of valuation allowance   $ -     $ -  

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate is as follows:

 

    2020     2019  
             
Statutory federal tax rate - (benefit) expense     21 %     21 %
State tax, net     -       -  
Non-deductible permanent items     (1 )     (6 )
Change in tax rate     -       -  
Valuation allowance     (20 )     (15 )
      - %     - %

 

For the years ended December 31, 2020 and 2019, the Company recorded full valuation allowances against its net deferred tax assets due to uncertainty regarding future realizability pursuant to guidance set forth in the FASB’s Accounting Standards Codification Topic No. 740, Income Taxes. In future periods, if the Company determines it will more likely than not be able to realize these amounts, the applicable portion of the benefit from the release of the valuation allowance will generally be recognized in the statements of operations in the period the determination is made.

 

At December 31, 2020, the Company had U.S. federal and state income tax net operating loss carryforwards of approximating $74,592,000 and $73,520,000, respectively, expiring through 2040. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions. The Company has not completed a study to assess whether an ownership change has occurred or whether there have been multiple ownership changes since the Company’s formation due to the complexity and cost associated with such a study, and the fact that there may be additional such ownership changes in the future.