Note 5. Income Taxes

Income tax provision (benefit) for the years ended February 28, 2017 and February 29, 2016 is summarized below:

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income taxes. The sources and tax effect of the differences are as follows:

Components of the net deferred income tax assets at February 28, 2017 and February 29, 2016 were as follows:

There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2014 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statements of operations. There have been no income tax related interest or penalties assessed or recorded.

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive and negative, management has determined that a $117,300 allowance at February 28, 2017 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year is $29,100.

As of February 28, 2017, the Company had a net operating loss carry forward of $311,708.  The loss will be available to offset future taxable income.  If not used, this carry forward will expire as follows:

As of February 28, 2017, we did not have any significant unrecognized uncertain tax positions.  All of the tax returns filed are subject to audit by the Internal Revenue Service.