(2)
Income Taxes
Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company’s deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry forwards. The net operating loss carry forward if not used, will expire in various years through 2037, and is severely restricted as per the Internal Revenue code due to the change in ownership. The Company’s deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operating loss carry forwards. Net operating loss carry forwards may be further limited by other provisions of the tax laws. With few exceptions, our income tax returns are no longer subject to Federal tax examinations by tax authorities for years before June 30, 2014.
The Company’s estimated deferred tax assets, valuation allowance, and change in valuation allowance are as follows:
Year Ending |
| Estimated NOL Carry-forward |
| NOL Expires |
| Estimated Tax Benefit from NOL |
| Valuation Allowance |
| Change in Valuation Allowance |
| Net Tax Benefit |
June 30, 2017 |
| $ 528,585 |
| Various |
| $ 97,788 |
| $ 97,788 |
| $ 11,997 |
| — |
June 30, 2016 |
| $ 463,739 |
| Various |
| $ 85,791 |
| $ 85,791 |
| $ (54,597) |
| — |
Income taxes at the statutory rate are reconciled to the Company’s actual income taxes as follows:
Income tax benefit at statutory rate resulting from net operating loss carry-forward |
| (15.0)% |
State tax (benefit) net of Federal benefit |
| (3.5)% |
Deferred income tax valuation allowance |
| 18.5% |
Actual tax rate |
| — |