As of December 31, 2016 and December 31, 2015, the Company has net operating losses from operations. The carry forwards expire through the year 2029. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 34% and State tax rate of 3.3% to income before taxes), as follows:
| US Dollars $ | For the Years Ended December 31, | |||||||
| 2016 | 2015 | |||||||
| Tax Expense (benefit) at the Statutory Rate | (20,500 | ) | (23,500 | ) | ||||
| State Income Taxes, Net of Federal Income Tax Benefit | (2,000 | ) | (2,500 | ) | ||||
| Change in Valuation allowance | (22,500 | ) | (26,000 | ) | ||||
| Total | - | - | ||||||
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
As of December 31, 2016, the Company has net operating losses from operations of 219,000. The carry forwards expire through the year 2023. The Company’s net operating loss carry forward may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code. A valuation allowance has been applied due to the uncertainty of realization.
The Company’s net deferred tax asset as of December 31, 2016 and December 31, 2015 is as follows:
Summary of Net Deferred Tax Asset
| For the Years Ended December 31, | ||||||||
| US Dollars $ | 2016 | 2015 | ||||||
| Deferred tax assets | $ | 77,000 | $ | 55,600 | ||||
| Valuation allowance | (77,000 | ) | (55,600 | ) | ||||
| Net deferred tax asset | $ | - | $ | - | ||||
The tax returns for 2013 through 2016 remain open for inspection by federal and state taxing authorities