NOTE 6 – INCOME TAXES
There was no provision for, or benefit from, income tax during the years ended December 31, 2016 and 2015 respectively. The components of the net deferred tax asset as of December 31, 2016 and 2015, including temporary differences and operating loss carry forwards that arose prior to reorganization from bankruptcy, are as follows:
| December 31, | 2016 | 2015 |
| Operating loss carry forwards | $ 8,062,514 | $ 8,131,464 |
| Origination and amortization of interest on convertible notes | 840,044 | 526,453 |
| Allowance for doubtful accounts | 61,814 | - |
| Change in derivative liabilities | 12,037 | - |
| Options issued for services | 646,764 | 637,872 |
| Total Deferred Tax Assets | $ 9,623,173 | $ 9,295,789 |
| Valuation allowance | (9,623,173) | (9,295,789) |
| Net Deferred Tax Asset | $ -- | $ -- |
Federal and state net operating loss carry forwards at December 31, 2016 and 2015 were $22,742,451and $21,796,597, respectively. A portion of the net operating loss carry forwards includes losses incurred prior to February 24, 2004, when a change of greater than 50% in ownership of the Company occurred. As a result of the change of ownership, only a portion of the net operating loss carry forwards incurred prior to the change becomes available each year. The net operating loss carry forwards begin to expire in 2020.
The following is a reconciliation of the amount of benefit that would result from applying the federal statutory rate to pretax loss with the provision for income taxes for the years ended December 31, 2016 and 2015, respectively:
| For the Years Ended December 31, | 2016 | 2015 |
| Tax at statutory rate (34%) | $ (711,683) | $ (877,090) |
| Options issued for services | 8,892 | 84,543 |
| Origination and amortization of interest on convertible notes | 313,591 | 500,936 |
| Allowance for doubtful accounts | 61,814 | - |
| Change in derivative liabilities | 12,037 | - |
| Change in valuation allowance | (315,348) | (292,411) |
| Provision for Income Taxes | $ -- | $ -- |
Under FASB ASC 740-10-05-6, tax benefits are recognized only for the tax positions that are more likely than not be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the company's tax return that do not meet these recognition and measurement standards.
The Company's policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits with the income tax expense. For the years ended December 31, 2016, and 2015, the Company did not recognized any interest or penalties in its Statement of Operations, nor did it have any interest or penalties accrued in its Balance sheet at December 31, 2016 and 2015 relating to unrecognized benefits.
The tax years 2016, 2015, 2014 and 2013 remain open to examination for federal income tax purposes and by other major taxing jurisdictions to which the Company is subject.