NOTE 3: INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Income tax periods 2014, 2015 and 2016 are open for examination by taxing authorities.
The income tax expense (benefit) for the year ended September 30, 2017 differs from the amount computed using the federal statutory rates as follows:
|
| Year Ended September 30, 2017 |
| Year Ended September 30, 2016 |
| Income tax expense (benefit) at 35% | (19,186) |
| (17,132) |
| State taxes | 100 |
| 100 |
| Change in valuation allowances | 19,186 |
| 17,132 |
| Total | 100 |
| 100 |
Deferred tax assets for the year ending September 30, 2016 and 2017 are comprised primarily of the following:
|
| September 30, 2017 | September 30, 2016 |
| Net Operating Loss Carryforward | 119,946 | 100,760 |
| Valuation allowance | (119,946) | (100,760) |
| Total deferred tax asset | $ 0 | $ 0 |
At September 30, 2017 the Company had a net operating loss carry forward of approximately $239,000 that may be offset against future taxable income through 2036. These losses will start to expire in the year 2016 through 2036. No tax benefit has been reported in the financial statements because the Company believes that it is more likely than not that the carryforwards will expire unused. The utilization of future losses may be limited under various provisions of the Internal Revenue Code pertaining to continuity of business operations limits and substantial changes in ownership. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. The valuation allowance increased during the year ended September 30, 2017 by approximately $19,186. The Company has no tax positions at September 30, 2017 and 2016 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties as of September 30, 2017 and 2016.