NOTE 9 – INCOME TAX
The Company follows ASC 740-10-50 “Accounting for Income Taxes.” Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.
The provision for refundable federal income tax consists of the following for the years ending:
| For the Years Ended | ||||||||
| August 31, | ||||||||
| 2017 | 2016 | |||||||
| Tax expense (benefit) at the statutory rate | ||||||||
| Federal | $ | (7,907,000 | ) | $ | (1,254,000 | ) | ||
| Change in valuation allowance | 7,907,000 | 1,254,000 | ||||||
| Total | $ | - | $ | - | ||||
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| August 31, | ||||||||
| 2017 | 2016 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ | 10,332,000 | $ | 2,425,000 | ||||
| Less: Deferred tax asset valuation allowance | (10,332,000 | ) | (2,425,000 | ) | ||||
| Total net deferred taxes | $ | - | $ | - | ||||
At August 31, 2017, the Company had an unused net operating loss carry-forward approximating $10,332,000 that is available to offset future taxable income; the loss carry-forward will start to expire in 2037.