| 7. | Income Taxes |
The provision for income taxes consist of the following for the year ended December 31:
| 2017 | 2016 | |||||||
| Current state provision (credit) | $ | 800 | $ | 800 | ||||
| Deferred provision (credit) | ||||||||
| Federal | - | - | ||||||
| State | - | - | ||||||
| Total deferred provision (credit) | - | - | ||||||
| Total provision (credit) | $ | 800 | $ | 800 | ||||
Deferred tax assets and liabilities consist of the following as of December 31:
| 2017 | 2016 | |||||||
| Net Operating Losses | $ | 103,725 | $ | 133,265 | ||||
| Depreciation | (11,055 | ) | (38,826 | ) | ||||
| Other | 19,076 | 28,218 | ||||||
| Subtotal | 111,746 | 122,657 | ||||||
| Valuation Allowance | (111,746 | ) | (122,657 | ) | ||||
| Net deferred tax asset (liability) | $ | - | $ | - | ||||
A reconciliation of the Company’s actual effective tax rate to the federal statutory tax rate of 34% is as follows for the years ended December 31, 2017, and 2016:
| 2017 | 2016 | |||||||||||||||
| Amount | % | Amount | % | |||||||||||||
| Pre tax income (loss) | $ | (78,037 | ) | $ | (190,064 | ) | ||||||||||
| Federal tax (credit) net | (12,785 | ) | -16 | % | (58,730 | ) | -30.9 | % | ||||||||
| State tax (credit) | (6,898 | ) | -8.9 | % | (16,916 | ) | -8.9 | % | ||||||||
| Valuation allowance | 20,483 | 25 .2 | % | 74,692 | 39.3 | % | ||||||||||
| Other | 000 | 0 | % | 1,754 | 0.9 | % | ||||||||||
| $ | 800 | 0.4 | % | $ | 800 | .4 | % | |||||||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The major temporary differences that give rise to the deferred tax assets and liabilities include depreciation, allowances for bad debt, expense accruals, state income tax deductions and net operating losses.
The federal income tax returns of the for Company for 2016, 2015 and 2014 are subject to examination by the Internal Revenue Service, generally for three years after they were filed. California income tax returns for 2016, 2015, 2014 and 2013 are subject to examination by the Franchise Tax Board, generally for four years after they were filed.
As of December 31, 2017, the Company has federal and state NOL carryovers of approximately $421,000 and $218,000, respectively. If unused, the carryovers will begin to expire in 2034.