BIOHITECH GLOBAL, INC.

Note 14. Income Taxes

The following table presents the components of income tax expense (benefit) from operations for the year ended December 31, 2016 and 2015.

	Year Ended December 31,
	2016		2015
US Federal:
Deferred	$	(1,932,456)	$	(1,055,914)
State and local:
Deferred		(681,025)		(215,098)
Non-US:
Deferred		(69,203)		-
Change in valuation allowance		2,682,684		1,271,012
Income tax provision	$	-	$	-

The following table presents a reconciliation of differences between the Federal statutory tax rate and the Company’s effective income tax rate for the year ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
U. S. Federal Statutory rate		(34.0)	%		(34.0)	%
Non-U.S. losses		0.6			1.0
Losses incurred before change in corporate tax status		-			14.3
Local taxes, net of benefit		(6.8)			(2.8)
Other		0.4			-
		(39.8)			(21.5)
Change in valuation allowance		39.8			21.5
Effective income tax rate		-	%		-	%

The following table presents the Company’s net deferred tax assets and valuation allowance as of December 31, 2016 and 2015:

	December 31,
	2016		2015
Deferred tax assets:
Net operating losses - Federal	$	2,341,288	$	1,067,247
Net operating losses - State		691,582		217,765
Net operating losses - Non-US		69,203		-
Stock-based compensation - Federal		246,069		-
Stock-based compensation - State		77,440		-
Accrued liabilities - Federal		412,346		-
Accrued liabilities - State		129,768		-
		3,967,696		1,285,012
Deferred tax liabilities:
Property and equipment - Federal		(11,333)		(11,333)
Property and equipment - State		(2,667)		(2,667)
		(14,000)		(14,000)
Net deferred tax assets		3,953,696		1,271,012
Valuation allowance		(3,953,696)		(1,271,012)
Net deferred tax assets	$	-	$	-

The net operating loss carryovers may be subject to limitation under Internal Revenue Code Section 382 should there be greater than a 50% ownership change as determined under the regulations. At December 31, 2016, the Company had net operating loss carryforwards for federal, state and non-US income tax purposes of approximately $7,198,649. The federal net operating loss carryforwards will expire, if not utilized, beginning December 31, 2035. There were no net operating losses for federal corporate income tax purposes prior to the year ended December 31, 2015. US Federal income tax returns for the years ended December 31, 2015 and later are open for examination and audit.