NOTE 11 - INCOME TAXES
The Company has adopted ASC 740 which provides for the recognition of a deferred tax asset based upon the value the loss carry-forwards will have to reduce future income taxes and management’s estimate of the probability of the realization of these tax benefits. Our net operating loss carryovers incurred prior to 2010 considered available to reduce future income taxes were reduced or eliminated through a change of control (I.R.C. Section 382(a)) and the continuity of business limitation of I.R.C. Section 382(c).
The Company has a current operating loss carry-forward in the United States of approximately $6,500,000 and in Israel of approximately $1,900,000, resulting in deferred tax assets of $2,666,175. The Company has determined it more likely than not that the related deferred tax assets will not materialize and have provided a valuation allowance against substantially all our net deferred tax asset.
| In US Dollars | ||||||||
| December 31 | ||||||||
| 2016 | 2015 | |||||||
| Individual components giving rise to the deferred tax assets are as follows:: | ||||||||
| Future tax benefit arising from net operating loss carryovers | 2,666,175 | 1,980,900 | ||||||
| Less valuation allowance | (2,666,175 | ) | (1,980,900 | ) | ||||
| Net deferred | - | - | ||||||
The components of pretax loss are as follows:
| In US Dollars | |||||||||
| December 31 | |||||||||
| 2016 | 2015 | ||||||||
| U.S. | (1,888,489 | ) | (690,420 | ) | |||||
| Non-U.S. | (398,840 | ) | (964,568 | ) | |||||
| (2,287,329 | ) | (1,654,988 | ) | ||||||
| Future utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of NOL and tax credit carry forwards before full utilization. | ||
| The Company is not under examination by any jurisdiction for any tax year. Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2013. | ||
| Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, the Company would record the related adjustment to income during the period in which the Company makes the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which the Company operate. | ||
| In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If the Company ultimately determines that payment of these amounts is unnecessary, the Company will reverse the liability and recognize a tax benefit during the period in which the Company determines that the liability is no longer necessary. The Company will record an additional charge in our provision for taxes in the period in which the Company determine that the recorded tax liability is less than the Company expects the ultimate assessment to be. |