5. Income Taxes
The Company has reviewed its tax positions as of December 31, 2017 and 2016, and has not identified any positions that are uncertain.
The tax effects of temporary differences that give rise to significant portions of the Company’s net deferred tax asset at December 31, 2017 and 2016 are as follows:
| December 31, 2017 | December 31, 2016 | |||||||
| Deferred tax asset: | ||||||||
| Capitalized formation costs | $ | 52,800 | $ | 77,700 | ||||
| Net operating loss carryforward | 11,200 | 14,300 | ||||||
| Valuation allowance | (64,000 | ) | (92,000 | ) | ||||
| Net deferred tax asset recognized | $ | -- | $ | -- | ||||
A full valuation allowance has been recorded against the Company’s deferred tax asset because, based on the weight of available evidence, it is more likely than not that such benefits will not be realized. As of December 31, 2017, the Company has a net operating loss carryforward for federal and state income tax purposes of approximately $53,300. The net operating loss carryforward will begin to expire in 2029.
The benefit from income taxes differs from the amount computed by applying the United States (US) federal income tax rate of thirty-four percent (34%) in 2017 and 2016 to loss before income taxes for the years ended December 31, 2017 and 2016 as follows:
| Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||
| US federal income tax benefit at statutory rate | $ | (11,500 | ) | $ | (10,600 | ) | ||
| Impact of Federal tax enactment | 39,500 | -- | ||||||
| Change in valuation allowance | (28,000 | ) | 10,600 | |||||
| Benefit from income taxes | $ | -- | $ | -- | ||||
As of December 31, 2017, the tax rate for corporations was reduced to 21%. The rate change decreased the Company’s deferred tax assets by $39,500.