NOTE 5 – INCOME TAXES 

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 bases.  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 the enactment.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2017 and 2016:

The income tax expense differs from the amount of income tax determined by applying the U.S. federal and state income tax rates to pretax income from continuing operations for the years ended December 31, 2017 and 2016 due to the following:

Book Loss

$             (14,100)

$             (61,800)

Related Party Payable

10,700

-

Depreciation

-

(300)

Express Tax Gain on Disposal

-

2,600

Impairment Loss

-

(982,600)

Capital Loss

-

(49,600)

Valuation Allowance

3,400

1,094,300

$                         -

$                         -

As of December 31, 2017, the Company had Net Operating Loss (NOL) carryforwards of approximately $14,255,000 that may be offset against future taxable income from the year 2018 through 2037.  No tax benefit has been reported in the December 31, 2017 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, Net Operating Loss carryforwards for Federal income tax reporting purposes are subject to annual limitations.  Because a change in ownership occurred, net operating loss carryforwards may be limited as to use in future years.

The Company classifies income tax penalties and interest, if any, as part of other general and administrative expenses in the accompanying consolidated statements of operations.  During the years ended December 31, 2017 and 2016, no penalties or interest were incurred.  Below is a table representing the tax years currently open for review.