8. Income Taxes

There was no provision for income tax for the years ended December 31, 2017 and 2016.  The Company files a consolidated federal income tax return.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted by the U.S.  Among the changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. Federal income tax rate applicable to corporations from 35% to 21%, effective January 1, 2018.

The difference between the basis of assets and liabilities for financial and income tax reporting are not considered material. There were approximately $1,130,000 in net operating loss carryforwards at December 31, 2017, and approximately $870,000 at December 31, 2016, representing a potential deferred tax asset.  The deferred tax asset amounted to approximately $237,000 at December 31, 2017 due to declining corporate tax rates, but was calculated at $290,000 at December 31, 2016 when rates were higher.  For net operating losses prior to the Merger, net operating loss carryforwards are subject to limitations as a result of a change in ownership as defined by IRC Section 382. Upon an assessment of the potential of realizing these deferred tax assets in the future, an offsetting valuation allowance has been established for the full amount of the deferred tax assets.