Salon has recorded a provision or benefit for federal or state income taxes for any period since inception due to incurred operating losses. As of Salon has net operating loss carryforwards of and for federal and California state purposes, respectively, available to reduce future taxable income, if any. During the fiscal year ended of the federal and of the California net operating loss carryforwards expired, with the balance of state carryforwards expiring over time thereafter if utilized beforehand. The federal net operating loss carryforwards begin to expire on if utilized beforehand.

 

As of Salon has research and development credit carryforward of for California income tax purposes. The research and development credit carryforward for federal income tax purposes expired on and the California credits carry forward indefinitely.

 

The Tax Reform Act of limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. In the event Salon has incurred a change in ownership, utilization of the carryforwards could be significantly restricted.

 

Temporary differences and other sources of deferred tax assets that give rise to significant portions of deferred tax assets and liabilities are as follows:

 

 

Due to the uncertainty of realizing the benefits attributable to the aforementioned deferred tax assets, Salon has provided a valuation allowance against the net deferred tax assets. The difference between Salon’s effective income tax rate and the federal statutory () rate is as follows:

 

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to Internal Revenue Service (“IRS”) examination for all years given losses reported on returns.

 

As of there were uncertain tax positions. Management does anticipate any future adjustments in the next months which would result in a material change to its tax position. For the years ended and the Company did have any interest and penalties.