Entity information:
NOTE L
— INCOME TAXES
 
Due to Milestone Scientific®€™
s history of operating losses, a full valuation allowances has been provided for all of Milestone Scientific®€™s deferred tax assets at
December
31,
2016
and
2015,
no recognition was given to the utilization of the remaining net operating loss carryforwards.
 
 
Deferred tax attributes resulting from differences between financial accounting amounts and tax bases of assets and liabilities at
December
31,
2016
and
2015
are as follows: 
   
2016
    
2015
  
Current assets
                
Allowance for doubtful accounts-short term
   $
4,000
     $
2,000
  
Warranty reserve
    
36,000
      
43,000
  
Deferred officers compensation
    
395,000
      
643,000
  
Subtotal
    
435,000
      
688,000
  
Valuation allowance
    
(435,000
 )    
(688,000
 )
Non-current assets
                
Depreciation and amortization
   $
135,000
     $
149,000
  
Net operating loss carryforward
    
18,456,000
      
16,160,000
  
Federal tax effect of state deferred tax assets
    
-
      
(117,000
 )
Subtotal
    
18,591,000
      
16,192,000
  
Valuation allowance
    
(18,591,000
 )    
(16,192,000
 )
 
As of
December
31,
2016,
federal net operating loss carryforwards are approximately
$51,807,000.
  As of
December
31,
2015
and Milestone Scientific has federal net operating loss carryforwards of approximately
$46,875,000,
which is comprised solely of losses attributable Milestone Scientific and its subsidiaries.  Net operating losses will be available to offset future taxable income, if any, through
December
2036.
As of
December
31,
2016
state net operating losses were approximately
$10,047,000.
As of
December
31,
2015
Milestone Scientific has state net operating loss carryforwards of approximately
$3,771,000.
  Net operating losses will be available to offset future taxable income, if any, through
December
2036.
 
The utilization of Milestone
Scientific's net operating losses
may
be subject to a substantial limitation due to the "change of ownership provisions" under Section
382
of the Internal Revenue Code and similar state provisions. Such limitation
may
result in the expiration of the net operating loss carry forwards before their utilization. Milestone Scientific has established a
100%
valuation allowance for all of its deferred tax assets due to uncertainty as to their future realization.
 
For the year ended
December
31,
2016
and
2015,
st
ate tax liability was approximately
$13,000
and
$62,000.
Such expense was recognized in the accompanying consolidated financial statements.
 
A reconciliation of the statutory tax rates for the years ended
December
31,
is as follows:
 
 
 
 
2016
 
 
2015
 
 
 
 
 
 
 
 
 
 
Statutory rate
 
 
34
%
 
 
34
%
State income tax - all states
 
 
6
%
 
 
6
%
Non-deductible stock based compensation
 
 
3
%
 
 
-
 
     
43
 %    
40
 %
Current year valuation allowance
 
 
(43
%)
 
 
(40
%)
Benefit for income taxes
 
 
0
%
 
 
0
%
 
 
 
 
 
 
 
Accounting for Uncertain Tax Positions:
 
Accounting for uncertainties in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in
a tax return, and also provides guidance on derecognition, classification, interest and penalties, disclosure and transition. At
December
31,
2016,
and
2015,
we had no uncertain tax positions that required recognition in the consolidated financial statements. Milestone Scientific's policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Statements of Operations. No interest and penalties are present for periods open. Tax returns for the
2013,
2014,
and
2015
years are subject to audit by federal and state jurisdictions.