6. INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company's assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company's tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
The Company is subject to US taxes. Historically, the Company has had no net taxable income, and therefore has paid no income tax.
As of August 31, 2017 and 2016, the Company had a net operating loss (NOL) carryforward of approximately $2,097,117, and $1,738,968. The NOL carryforward begins to expire in various years through 2030. Because management is unable to determine that it is more likely than not that the Company will realize the tax benefit related to the NOL carryforward, by having future taxable income, a full valuation allowance has been established at August 31, 2017 to reduce the tax benefit asset value to zero.
Components of net deferred tax assets, including a valuation allowance, are as follows at August 31st:
| 2017 | 2016 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss | 734,291 | 608,989 | ||||||
| Valuation allowance | (734,291 | ) | (608,989 | ) | ||||
| Total deferred tax assets | $ | - | $ | - | ||||
The valuation allowance for deferred tax assets as of August 31, 2017 and 2016 was $734,291 and $608,989, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of August 31, 2017 and 2016, and recorded a full valuation allowance.