NOTE 14 – INCOME TAXES
For the year ended December 31, 2016, the Company incurred a net loss of $1,025,807. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $13,196,000 at December 31, 2016, and will expire beginning in the year 2021.
The provision for taxes on income from operations for the years ended December 31, 2016 and 2015 consisted of the following:
| 2016 | 2015 | |||||||
| Expense (benefit) at Federal statutory rate – 34% | $ | (345,780 | ) | $ | (838,100 | ) | ||
| State tax effects, net of Federal taxes | (1,737 | ) | (4,210 | ) | ||||
| Nondeductible expenses | 1,777 | 663 | ||||||
| Nontaxable income | — | — | ||||||
| Deferred tax asset valuation allowance | 345,740 | 841,647 | ||||||
| Income tax expense | $ | — | $ | — | ||||
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of December 31, 2016 and 2015:
| 2016 | 2015 | |||||||
| Net operating loss carry-forward | $ | 2,828,708 | $ | 760,042 | ||||
| Valuation allowance | (2,828,708 | ) | (760,042 | ) | ||||
| Net deferred tax asset | $ | — | $ | — | ||||
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. A valuation allowance has been recorded primarily related to tax benefits associated with income tax operating loss carry-forwards. Adjustments to the valuation allowance will be made if there is a change in management’s assessment of the amount of the deferred tax asset that is realizable.
At December 31, 2016, the Company had available net operating loss carry-forwards of approximately $13,196,000 for federal income tax purposes that have a range of expiration dates beginning in the year of 2020 and extending through the year of 2036. The federal carryforwards resulted from losses generated in 1996 through 2002, 2005, 2006, 2008, 2009, 2010, 2012, 2013, 2014, 2015 and 2016.
The Company adopted the provisions of ASC 740 as of January 1, 2007, and has analyzed filing positions in each of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We have identified the U.S. Federal, Nebraska, and Florida as our “major” tax jurisdictions.
The Company believes that its income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. In addition, the Company did not record a cumulative effect adjustment related to the adoption of ASC 740. The Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.