NOTE 8 – INCOME TAXES
A reconciliation of the provision for income taxes at the United States federal statutory rate of 34% and a Colorado state rate of 5% compared to the Company’s income tax expense as reported is as follows:
| Income tax valuation allowance | ||||||||||||
| December 31 | December 31, | December 31, | ||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Net loss before income taxes | $ | (116,138 | ) | $ | (1,154,285 | ) | $ | (15,000 | ) | |||
| Adjustments to net loss | ||||||||||||
| Warrant expense | — | 1,328,000 | — | |||||||||
| Gain on exchange of debt for stock | — | (270,822 | ) | — | ||||||||
| Net taxable income (loss) | (116,138 | ) | (97,107 | ) | (15,000 | ) | ||||||
| Income tax rate | 39 | % | 39 | % | 39 | % | ||||||
| Income tax recovery | 45,295 | 37,870 | 5,850 | |||||||||
| Valuation allowance change | (45,295 | ) | (37,870 | ) | (5,850 | ) | ||||||
| Provision for income taxes | $ | — | $ | — | $ | — | ||||||
The significant components of deferred income tax assets at December 31, 2017, December 31, 2016 and 2015 are as follows:
| Components of deferred income tax assets | ||||||||||||
| December 31, | December 31, | December 31, | ||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Net operating loss carryforward | $ | 213,245 | $ | 97,107 | $ | — | ||||||
| Valuation allowance | (213,245 | ) | (97,107 | ) | — | |||||||
| Net deferred income tax asset | $ | — | $ | — | $ | — | ||||||
As of December 31, 2017, the Company has no unrecognized income tax benefits. Based on management’s understanding of IRC Sec 383 the substantial change in ownership and change in business activities precludes any carryforward of the accumulated net operating losses. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the years ended December 31, 2015 and 2014, and no interest or penalties have been accrued as of December 31, 2017. As of December 31, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.
As at December 31, 2017, the current management of the Company has been unable to ascertain when the last corporation income tax returns were filed. As at December 31, 2017, the Company is current in its tax filing obligations for the years under control by the new management. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities. The Company has not recorded any liability for an uncertain tax position related to the lack of return filings since the Company records show a continuing pattern of losses for the periods in question. Since penalties are commonly assessed based on tax amounts owed management has deemed in unnecessary to record any liability.