Note 5 – Income Taxes
The Company accounts for income taxes using the asset and liability approach in accounting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts calculated for income tax purposes.
The Company has federal net operating loss carryforwards of approximately $4,204,894 expiring in various years through 2037. The tax benefit of these net operating losses has been offset by a full allowance for realization. The use of the net operating loss carryfowards may be limited due to a change in control.
Income tax expense (benefit) consists of the following for the year ended March 31, 2017:
| Current taxes | $ | — | ||
| Deferred taxes | 329,734 | |||
| Less: valuation allowance | (329,734 | ) | ||
| Net income tax provision | $ | — |
The Company’s effective tax rate differs from the high statutory rate for the period ended March 31, 2017, due to the following (expressed as a percentage of pre-tax income):
| Federal taxes at statutory rate | $ | 34.0 | % | |
| State taxes, net of federal tax benefit | 5.0 | % | ||
| Valuation allowance | (39.0 | )% | ||
| Effective income tax rate | $ | 0.0 | % |
As of March 31, 2017, the components of these temporary differences and the deferred tax asset were as follows:
| Deferred Tax assets: | ||||
| Net operating loss carryforward | $ | 2,218,580 | ||
| Less: valuation allowance | (2,218,580 | ) | ||
| Net deferred tax assets | $ | — |