Income Taxes

The provision for income taxes differs from the amount computed by applying the statutory income tax rate to loss before income taxes as follows at December 31:

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates on the date of enactment. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. At December 31, 2016, the Company had net operating loss carryforwards of approximately $150,000 that may be offset against future taxable income from the year 2017 through 2030. This results in a deferred tax asset of $50,913 as of December 31, 2016. At December 31, 2015, the Company had net operating loss carryforwards of approximately $105,600. This results in a deferred tax asset of $35,911 as of December 31, 2015. During the year ended December 31, 2015, the Company disposed of its wholly owned subsidiary which resulted in the disposition of $48,500 of net operating loss carryforwards and the $1,676 deferred asset relating to an inventory allowance. The Company has fully allowed for these assets as of the years then ended. The valuation allowance is estimated to be approximately $53,720 and $35,911 for the years ended December 31, 2016 and 2015, respectively.