9. Income Taxes
The Company’s income before taxes for 2016 and 2015 are as follows:
|
| 2016 | 2015 |
| United States | $ 353,077 | $ 360,325 |
| New Zealand | 298,559 | 40,723 |
| Income before taxes | $ 651,636 | $ 401,048 |
The provision for income taxes consists of the following:
|
|
|
|
|
| 2016 | 2015 |
| Current | 0 | 0 |
| Deferred |
|
|
| Federal | 322,954 | 200,994 |
| State | 40,123 | 25,394 |
| Total Provision (Benefit) | $ 363,077 | $ 226,388 |
The components of the Company’s deferred tax assets and liabilities are as follows:
|
| 2016 | 2015 |
| Deferred Tax Assets (liabilities) |
|
|
| Accounts Receivable | $62,058 | $66,550 |
| Accrued Vacation | 170,593 | 149,035 |
| Net Operating Loss | 262,977 | 411,594 |
| Note Receivable | 148,756 | 298,072 |
| Fixed Assets | (78,652) | 0 |
| Net Operating Loss Carryforwards | 88,622 | 188,002 |
| Less: Valuation Allowance | (117,983) | (213,805) |
| Total Deferred Tax Asset, Net | $ 536,371 | $ 899,448 |
As of December 31, 2016, the Company had net operating loss carry forwards amounting to $687,987 for domestic jurisdictions which expire on various dates through 2028 and $423,582 for foreign jurisdictions that do not expire. The Company has reported a full valuation allowance on deferred tax assets in foreign jurisdictions, which changed from $213,805 to $117,983 during the year ended December 31, 2016 resulting in a decrease of $95,822.
The Company’s US based net operating losses available for future use are as follows:
| Year | Available Net Operating Loss | Expires |
| 2007 | 18,840 | 2027 |
| 2008 | 669,147 | 2028 |
| Total Available | 687,987 |
|
Income tax expense differs from amounts computed by applying the statutory Federal rate to pretax income as follows:
|
|
|
|
|
| 2016 | 2015 |
| Expected US income tax on Consolidated Income before Tax effects of: | $ 221,556 |
$ 122,510 |
| State income tax on consolidated income before tax net federal benefit | 40,123 | 15,220 |
| Change in valuation allowance | (95,822) | (138,130) |
| Non-deductible expenses | 82,106 | 151,461 |
| Earnings in foreign jurisdictions taxes at rates different from the statutory U.S. federal rate | 95,822 | 1,629 |
| Income from foreign subsidiary | (114,121) | (15,566) |
| Prior period adjustment | 38,146 | 0 |
| Currency valuation adjustment | 65,210 | 52,691 |
| Other, net | 30,057 | 36,573 |
| Effective Tax Provision | $ 363,077 | $ 226,388 |
The Company has evaluated its uncertain tax positions and determined that any required adjustments would not have a material impact on the Company's balance sheets, statements of operations, or statements of cash flows.
The tax years 2007, 2008 and 2013 through 2016 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.