NOTE 12. INCOME TAXES

The components of the provision consist of the following for the years ended December 31, 2020 and 2019:

The income tax provision differs from that computed at the federal statutory corporate income tax rate as follows for the years ended December 31, 2020 and 2019:

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following at December 31, 2020 and 2019:

On August 21, 2020, the Company completed the acquisition of 100% of the member interests in PGP. As of December 31, 2020, the Company has evaluated its deferred tax attributes related to the acquisition of within the foreign jurisdiction of Isle of Man and recorded a tax-effected deferred tax asset of $0 as of December 31, 2020. The Company has assessed the foreign subsidiary income and taken the position that the income is subject to the provisions of Subpart F. Additional analysis is needed to determine if all or some part of this foreign income is eligible to be categorized as global intangible low-taxed income.

Pursuant to the CARES Act, the Company carried back net operating losses incurred in 2020 in the amount of approximately $3.5 million to tax years ended December 31, 2015 through December 31, 2019. The net operating loss carryback resulted in prior years' foreign tax credits and general business credits being released to subsequent years within the carryback period, with no credits carried forward as of December 31, 2020.

In addition, as of December 31, 2020, the Company recognized state net operating loss carryforwards of $1.1 million. The majority of the state carryforward amounts will expire in 2040, while some state net operating losses have an indefinite carryforward period.

In accordance with US GAAP, the need to establish a valuation allowance against deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses; forecasts of future profitability; the duration of statutory carryforward periods; experience with tax attributes expiring unused; and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified.

Upon assessing all of the relevant evidence, the Company determined it has not met the more-likely-than-not threshold to support the realization of all or part of its deferred tax assets. The Company has recorded a valuation allowance against certain of its deferreds in the amount of $560,389. The current-year change resulted in additional tax expense of $560,389, which impacted the Company’s effective tax rate by (16.11%).

The aggregate changes in the balance of gross unrecognized tax benefits (included as part of deferred tax liabilities, net in the accompanying financial statements), which excludes interest and penalties, are as follows as of and for the years ended December 31, 2020 and 2019:

Our total liability for unrecognized gross tax benefits was $46,699 as of December 31, 2020, which, if ultimately recognized, would impact the annual estimated effective tax rate in future periods. We are subject to examination by the Internal Revenue Service for fiscal years 2017 and thereafter. For states within the U.S. in which we conduct significant business, we generally remain subject to examination for fiscal years 2017 and thereafter, unless extended for longer periods under state laws. We have no accrual for interest or penalties related to uncertain tax positions at December 31, 2020 and 2019, and did not recognize interest or penalties in the statements of operations during the years ended December 31, 2020 and 2019, as such amounts would be immaterial, if any.