7. INCOME TAXES
The reconciliation of income taxes at statutory income tax rates to the income tax expense is as follows. The losses incurred by the wholly-owned Canadian subsidiary are insignificant, hence no separate disclosure has been made:
| 2016 | 2015 | |||||||
| Loss before income taxes | $ | (12,364 | ) | $ | (22,612 | ) | ||
| Applicable statutory tax rate | 34 | % | 34 | % | ||||
| Income tax recovery at statutory rate | (4,204 | ) | (7,689 | ) | ||||
| Timing difference | (43,420 | ) | (43,420 | ) | ||||
| Tax loss benefit not recognized | 47,624 | 51,109 | ||||||
| Income tax - current and deferred | $ | - | $ | - | ||||
The enacted U.S. Federal statutory tax rates and estimated state rates for the years is as follows:
| 2016 | 2015 | |||||||
| Statutory rate - benefit | 34 | % | 34 | % | ||||
| State taxes, net of federal benefit | - | - | ||||||
| Effective rate - benefit | 34 | % | 34 | % | ||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
| Deferred tax asset: | 2016 | 2015 | ||||||
| Operating losses available to offset future income taxes | $ | 624,807 | $ | 576,463 | ||||
| Tax basis of license in excess of accounting basis | 319,663 | 363,084 | ||||||
| Deferred tax asset | 943,750 | 939,547 | ||||||
| Valuation allowance | (943,750 | ) | (939,547 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
Realization of the deferred tax asset also depend on the Company’s ability to generate taxable income within the carryforward period. Due to uncertainty related to the Company’s ability to generate taxable income sufficient to realize all of its deferred tax assets, the Company has recorded 100% valuation allowance.
As at December 31, 2016, the Company has losses for tax purposes which can be applied against future taxable income. These losses expire as follows:
| 2036 | 140,071 | |
| 2035 | 150,320 | |
| 2034 | 139,799 | |
| 2033 | 143,054 | |
| 2032 | 175,273 | |
| 2031 | 183,949 | |
| 2030 | 187,150 | |
| 2029 | 131,602 | |
| 2028 | 78,145 | |
| 2027 | 30,760 | |
| 2026 | 32,912 | |
| 2025 | 208,887 | |
| 2024 | 233,627 | |
| Total | $ | 1,835,549 |