Income Taxes
As a result of a full valuation allowance provided against deferred tax assets on net operating loss carryforwards, the Company has no resulting income tax benefits for Fiscal 2016, 2015 and 2014. The components of the Company’s deferred income tax assets and associated valuation allowance at December 31, 2016 and December 31, 2015 are as follows:
|
| | | | | | | | |
| | December 31, |
| | 2016 | | 2015 |
Deferred tax assets: | | | | |
Net operating loss carryforwards | | $ | 310,864 |
| | $ | 387,640 |
|
Total deferred tax assets | | 310,864 |
|
| 387,640 |
|
Less: valuation allowance | | (310,864 | ) |
| (387,640 | ) |
Net deferred income taxes | | $ | — |
|
| $ | — |
|
During the year ended December 31, 2016, the Company decreased its valuation allowance for deferred tax assets by $76,776 as a result of a corresponding reduction in NOLs. The Company believes sufficient uncertainty exists regarding the realizability of its deferred tax assets such that a full valuation allowance is required. As of December 31, 2016, the Company had approximately $888,000 of net operating loss carryforwards which will start to expire in 2029. In the event there is another change of control in the ownership of the Company, as defined by the IRC, the annual utilization of the net operating losses could be further limited.
The Company did not have any unrecognized tax benefits related to uncertain tax positions as of December 31, 2016 or 2015. Future amounts of accrued interest and penalties, if any, related to uncertain tax positions would be recorded as a component of income tax expense. The Company does not expect that the amount of unrecognized tax benefits will change significantly in the next twelve months.
The Company has been, and expects to continue to be for the foreseeable future, a member of its Principal Stockholder’s consolidated tax group and is subject to Federal income tax examinations for years after 2012 and state and local income tax examinations for years after 2010. Although the Company has entered into a tax sharing and indemnity agreement with its Principal Stockholder, if the Principal Stockholder or members of its consolidated tax group (other than the Company) fail to pay tax liabilities arising prior to the time that the Company is no longer a member of its Principal Stockholder’s consolidated tax group, the Company could be required to make payments in respect of these tax liabilities and these payments could materially adversely affect its financial condition.