| 8. | Income Taxes |
The income tax expense (benefit) consisted of the following for the fiscal year ended September 30, 2017 and the period from June 7, 2016 (inception) through September 30, 2016:
| September 30, 2017 | September 30, 2016 | |||||||
| Total current | $ | - | $ | - | ||||
| Total deferred | - | - | ||||||
| $ | - | $ | - |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
The following is a reconciliation of the expected statutory federal income tax provision to the actual income tax benefit for the fiscal year ended September 30, 2017 and the period from June 7, 2016 (inception) through September 30, 2016:
| September 30, 2017 | September 30, 2016 | |||||||
| Federal statutory rate | $ | (934,000 | ) | $ | (30,000 | ) | ||
| State taxes, net of federal benefit | - | - | ||||||
| Effect of change in US Tax rates for deferral items | 208,000 | - | ||||||
| Other | - | - | ||||||
| Change in valuation allowance | 726,000 | 30,000 | ||||||
| $ | - | $ | - | |||||
In the table above, the expected tax benefit is calculated at the 2017 statutory rate of 34%. The effect for temporary timing differences are also calculated at the 34% statutory rate effective for fiscal year ended September 30, 2018. Long-term temporary differences are calculated at the 25% statutory rate effective for years ending on or after December 31, 2018.
Significant components of the Company’s deferred tax assets and liabilities were as follows for the fiscal year ended September 30, 2017 and the period from June 7, 2016 (inception) through September 30, 2016:
| September 30, 2017 | September 30, 2016 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | 546,000 | $ | 30,000 | ||||
| Equity based compensation | 204,000 | |||||||
| Impairment of loan receivable | 75,000 | |||||||
| Depreciation | 6,000 | - | ||||||
| Total deferred tax assets | 831,000 | 30,000 | ||||||
| Deferred tax liabilities | ||||||||
| Deferred revenue | 75,000 | - | ||||||
| Total deferred tax liabilities | 75,000 | - | ||||||
| Net deferred tax assets | 756,000 | 30,000 | ||||||
| Less valuation allowance | (756,000 | ) | (30,000 | ) | ||||
| Net deferred tax assets (liabilities) | $ | - | $ | - | ||||
At September 30, 2017, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $2,182,000. The federal and state net operating loss carryforwards will expire beginning in 2036.
During the fiscal year ended September 30, 2017 and the, the Company recognized no amounts related to tax interest or penalties related to uncertain tax positions. The Company is subject to taxation in the United States and various state jurisdictions. The Company currently has no years under examination by any jurisdiction.