| 5. | INCOME TAXES |
The provision (benefit) for income taxes consisted of the following for the years ended December 31, 2016 and 2015:
| 2016 | 2015 | |||||||
| Current | $ | — | $ | — | ||||
| Deferred | (19,300 | ) | (22,400 | ) | ||||
| Change in valuation allowance | 19,300 | 22,400 | ||||||
| Income tax provision (benefit) | $ | — | $ | — | ||||
The following table reconciles the effective income tax rates with the statutory rates for the years ended December 31:
| 2016 | 2015 | |||||||
| U.S. federal statutory rate | 42.0 | % | 42.0 | % | ||||
| Change in valuation allowance | (42.0 | ) | (42.0 | ) | ||||
| Effective income tax rate | — | % | — | % | ||||
Deferred tax assets are comprised of the following:
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| Net operating loss carryforwards | $ | 152,900 | $ | 133,600 | ||||
| Valuation allowance | (152,900 | ) | (133,600 | ) | ||||
| Net deferred tax assets | $ | — | $ | — | ||||
At December 31, 2016, the Company had approximately $364,000 of federal net operating losses that may be available to offset future taxable income. The Federal net operating loss carryover, if not utilized, will expire beginning in 2026. Through 2036, the amount and utilization of any future net operating loss carry-forwards may be subject to limitations set forth by the Internal Revenue Code. Based upon an analysis of the Company’s stock ownership activity through December 31, 2012, a change of ownership was deemed to have occurred in 2012. This change of ownership created an annual limitation of substantially all of the Company’s net operating losses which are available through 2031.
The Company assesses the likelihood that deferred tax assets will be realized. To the extent that realization is not likely, a valuation allowance is established. Based upon the Company’s losses since inception, management believes that it is more likely than not that future benefit of the deferred tax asset will not be realized principally due to the continuing losses from operations and the change of ownership limitations and has therefore established a full valuation allowance. The valuation allowance increased by $19,300 and $22,400 during the years ended December 31, 2016 and 2015, respectively.
The tax years ended December 31, 2013, 2014 and 2015 remain open to examination by the taxing authorities.