NOTE 14 – INCOME TAXES
At December 31, 2016 (Successor), net operating loss carry forwards for Federal and state income tax purposes totaling approximately $2,914,000 available to reduce future income which, if not utilized, will begin to expire in the year 2032. There is no income tax affect due to the recognition of a full valuation allowance on the expected tax benefits of future loss carry forwards based on uncertainty surrounding realization of such assets.
A reconciliation of the statutory income tax rates and the effective tax rate is as follows:
| For
the One Month Ended December 31, |
For
the Eleven Months Ended November 30, |
For
the Year Ended December 31, |
||||||||||
| 2016 | 2016 | 2015 | ||||||||||
| Successor | Predecessor | Predecessor | ||||||||||
| Statutory U.S. federal rate | 34.0 | % | 34.0 | % | 34.0 | % | ||||||
| State income tax, net of federal benefit | 5.9 | % | 5.9 | % | 5.9 | % | ||||||
| Permanent differences | (8.3 | )% | (2.8 | )% | (2.1 | )% | ||||||
| Valuation allowance | (31.6 | )% | (37.1 | )% | (37.8 | )% | ||||||
| Provision for income taxes | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
The tax effects of the temporary differences and carry forwards that give rise to deferred tax assets consist of the following:
| December 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| Successor | Predecessor | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ | 1,161,751 | $ | 1,071,043 | ||||
| Stock based compensation | 1,043,626 | - | ||||||
| Valuation allowance | (2,205,377 | ) | (1,071,043 | ) | ||||
| $ | - | $ | - | |||||
Major tax jurisdictions are the United States and California. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively, from the date of utilization of the net operating loss. There are no tax audits pending.