8.
Income Taxes
There is no provision for income taxes for the years ended December 31, 2017 and December 31, 2016 due to the availability of net operating loss carryforwards. At December 31, 2017 and December 31, 2016, the Company had NOL’s approximating $4,183,000 and $4,585,000, respectively. The operating losses at December 31, 2017 are available to offset future taxable income; however, if not utilized, they expire in varying amounts through the year 2032. The utilization of these NOL’s to reduce future income taxes will depend on the generation of sufficient taxable income prior to their expiration. There were no material temporary differences for the years ended December 31, 2017 and December 31, 2016. The Company has established a 100% valuation allowance of approximately $1,171,000 and $1,926,000 at December 31, 2017 and December 31, 2016, respectively, for the deferred tax assets due to the uncertainty of their realization.
On December 22, 2017, The Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act decreases the U.S. corporate federal income tax rate from a maximum of 35% to a flat 21% effective January 1, 2018. The impact of the re-measurement on the Company’s net tax asset, as of December 31, 2017, was a decrease of approximately $586,000 in deferred tax assets with a corresponding decrease in the Company’s valuation allowance.
The reconciliation of the statutory federal rate to the Company's effective tax rate follows:
|
| 2017 |
|
| 2016 |
| ||||||||||
|
| Amount |
|
| % |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Income tax benefit at U.S. federal income tax rate |
| $ | (1,422,300 | ) |
|
| (34 | ) |
| $ | (1,558,800 | ) |
|
| (34 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State tax net of federal tax effect |
|
| (334,600 | ) |
|
| (8 | ) |
|
| (366,800 | ) |
|
| (8 | ) |
Tax rate change |
|
| 585,600 |
|
|
| 14 |
|
|
| – |
|
|
| – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance |
|
| 1,171,300 |
|
|
| 28 |
|
|
| 1,925,600 |
|
|
| 42 |
|
|
| $ | – |
|
|
| – |
|
| $ | – |
|
|
| – |
|
The Company has adopted the provisions of FASB ASC 740-10-50-15, “Unrecognized Tax Benefit Related Disclosures.” There were no unrecognized tax benefits as of the date of adoption and no unrecognized tax benefits at December 31, 2017. There was no change in unrecognized tax benefits during the year ended December 31, 2017 and there was no accrual for uncertain tax positions as of December 31, 2017.
There were no interest and penalties recognized in the statement of operations and in the balance sheet. Tax years from 2013 through 2017 remain subject to examination by U.S. federal and state tax jurisdictions.