Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The Company accounts for income taxes pursuant to ASC 740.

The types of temporary differences between the tax basis of assets and their financial reporting amounts that give rise to a significant portion of the deferred assets and liabilities are as follows:

Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur.

At December 31, 2016 and December 31, 2015, the Company had approximately $847,308 and $407,391, respectively, in unused federal net operating loss carry-forwards, which begin to expire principally in the year 2029. A deferred tax asset at each date of approximately $327,315 and $157,375 resulting from the loss carry-forwards has been offset by a 100% valuation allowance.

The following table reconciles the statutory U.S. federal income tax rate to the Company's effective income tax rate.