The provision (benefit) for income taxes for the years ended March 31, 2017 and 2016 assumes a 34% effective tax rate for federal income taxes.
| March
31, 2017 |
March
31, 2016 |
|||||||
| Current tax provision: | ||||||||
| Federal | $ | (57,000 | ) | $ | (17,000 | ) | ||
| State | (1,000 | ) | - | |||||
| Taxable income – Federal and State | $ | (168,000 | ) | $ | (51,000 | ) | ||
| Deferred tax provision | $ | 58,000 | $ | 17,000 | ||||
The Company had deferred income tax assets as of March 31, 2017 and 2016 are as follows:
| March
31, 2017 |
March
31, 2016 |
|||||||
| Loss carryforwards | $ | 148,000 | $ | 90,000 | ||||
| Less – valuation allowance | (148,000 | ) | (90,000 | ) | ||||
| Total net deferred tax assets | $ | -- | $ | -- | ||||
The Company provided a valuation allowance equal to the deferred income tax assets for the fiscal years ended March 31 2017 and 2016, respectively, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
At March 31, 2017, the Company had approximately $434,000 in federal and state tax loss carryforwards that can be utilized in future periods to reduce taxable income, and begin to expire in 2027. Pursuant to Internal Revenue Code Section 382, the future utilization of our net operating loss carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that may have occurred previously or that could occur in the future.
The Company did not identify any material uncertain tax positions on tax returns that will be filed. The fiscal years ended March 31, 2017, 2016, 2015, 2014 and 2013 are open for potential examination.