8. INCOME TAXES

The tax effect of temporary differences that give rise to future income tax assets are as follows:

The provision for income taxes varies from the expected provision at statutory rates for the following reasons:

The income tax expense of $129 for fiscal year 2017 represents alternative minimum tax arising from the previous fiscal year ended March 31, 2016, but paid and expensed in the current period.  The income tax benefit of $6 for fiscal year 2016 represents a true up of the prior year accrual to actual.  The prior year had federal income taxes due to the alternative minimum tax computation’s limitation of the utilization of net operating loss carry forwards and the alternative minimum tax rate of 20%.

The Company has accumulated net operating losses for income tax purposes totaling approximately $79,369, which under certain conditions, may be carried forward and applied to reduce future year’s taxable income.  Such losses may be subject to limitation under IRC Section 382 if there was a change in control as defined by the Internal Revenue Service. The potential benefit associated with these losses is not reflected in these statements as the Company’s management does not believe that recovery is more likely than not. The right to claim these losses will expire beginning 2018.

Tax years that remain open for examination by the Internal Revenue Service include 2012, 2013, 2014 and 2015.