NOTE 16 – INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due. Deferred taxes relate to differences between the basis of assets and liabilities for financial and income tax reporting which will be either taxable or deductible when the assets or liabilities are recovered or settled.
At December 31, 2016 and 2015, the Company had net operating loss (“NOL”) carry-forwards for federal and state income purposes approximating $5,434,137 and $4,333,812, respectively. These losses are available for future years and expire through 2034. Pursuant to Internal Revenue Code Section 382, utilization of these losses may be severely or completely limited due to more than 50% ownership changes in 2014, 2011 and 2010.
The deferred tax asset at December 31, 2016 and 2015 is summarized as follows:
| Income Tax Footnote | 12/31/2016 | 12/31/2015 | ||
| Cumulative NOL | $ | (5633,041) | $ | (4,333,812) |
|
|
| |||
| Deferred Tax assets: |
| |||
| (34% Federal, 7% Avg. Corp. Rate) |
| |||
| Net operating loss carry forwards | (8,473,442) | (7,668,510) | ||
| Stock/options issued for services | 5,312,555 | 5,270,524 | ||
| Stock/options issued for release | 415,621 | 415,621 | ||
| Depreciation and amortization | 93,322 | 61,977 | ||
| Impairment expense | 144,913 | 144,913 | ||
| Unrealized losses on investment |
| 199,287 |
| - |
| Valuation allowance | 2,307,744 | 1,775,475 | ||
|
| $ | - | $ | - |
The Company has taken a 100% valuation allowance against the deferred asset attributable to the NOL carry-forwards of approximately $2,307,744 and $1,775,000 at December 31, 2016 and 2015, respectively, due to the uncertainty of realizing the future tax benefits. The increase in valuation allowance of approximately $532,000 is primarily attributable to the Company’s net operating loss during the year ended December 31, 2016.
The components of the income tax provision for the years ended December 31, 2016 and 2015 are as follows:
|
| 2016 | 2015 | ||
| Book income (loss) from operations | $ | (804,932) | $ | (3,268,362) |
| Stock/options issued for services | 42,031 | 2,355,856 | ||
| Stock/options issued for release | - | 33,594 | ||
| Depreciation and amortization | 31,345 | 56,765 | ||
| Unrealized losses on investment | 199,287 | - | ||
| Change in valuation allowance | 532,269 | 822,147 | ||
|
| $ | - | $ | - |