NOTE 10 – DEFERRED INCOME TAX
Deferred income tax provision for the years ended September 30, 2017and 2016 is summarized below:
| 2017 | 2016 | ||||||
| Federal | $ | (17,400 | ) | $ | (64,500 | ) | |
| State | (1,600 | ) | (5,900 | ) | |||
| Total deferred | (19,000 | ) | (70,400 | ) | |||
| Increase in valuation allowance | 19,000 | 70,400 | |||||
| $ | — | $ | — |
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:
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:
| 2017 | 2016 | ||||||
| Income tax provision – federal rate | 34.0 | % | 34.0 | % | |||
| State income taxes, net of federal benefit | 3.1 | % | 3.1 | % | |||
| Effect of net operating loss | (37.1% | ) | (37.1% | ) | |||
| — | — |
The net deferred income tax assets at September 30, 2017 and 2016 were approximately$401,200 and $382,200, respectively.
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 full valuation allowance at September 30, 2017 and 2016, respectively, is necessary to reduce the deferred tax assets to the amount that is more likely than not to be realized. The change in valuation allowance for the current year is $16,800.
As of September 30, 2017, we have a net operating loss carry forwards of approximately $1,081,300(2016: $1,030,100). The loss will be available to offset future taxable income. If not used, thesecarry forwards will expire in varying amounts through 2037.
There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2011 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations. There have been no income tax related interest or penalties assessed or recorded.
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
For the years ended September 30, 2017 and 2016 we did not have any interest and penalties associated with tax positions. As of September 30, 2017, we did not have any significant unrecognized uncertain tax positions.