NOTE 4. INCOME TAX
As of December 31, 2017, the Company had net operating loss carry forwards of approximately $454,944 that may be available to reduce future years’ taxable income through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from 35% to 21% effective January 1, 2018. The 21% Federal Tax Rate will apply to earnings reported for the full 2018 fiscal year. In addition, the Company must re-measure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. As of December 31, 2017, the Company can determine a reasonable estimate for certain effects of tax reform and is recording that estimate as a provisional amount. The provisional remeasurement of the deferred tax assets and allowance valuation of deferred tax assets at December 31, 2017 resulted in a net effect of $0 discrete tax expenses (benefit) which lowered the effective tax rate by 13% for the year ended December 31, 2017. The provisional remeasurement amount is anticipated to change as data becomes available allowing more accurate scheduling of the deferred tax assets and liabilities primarily related to net operating loss carryover.
The provision for federal income tax consists of the following for the year ended December 31:
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2017 |
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2016 |
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Federal income tax benefit attributable to: |
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Current Operations |
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$ | 39,672 |
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$ | 22,077 |
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Less: valuation allowance |
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(39,672 | ) |
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(22,077 | ) |
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Net provision for Federal income taxes |
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$ | - |
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$ | - |
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The significant items comprising our net deferred tax amounts as of December 31, 2017 and 2016 is as follows:
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2017 |
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2016 |
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Deferred tax asset attributable to: |
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Net operating loss carryover |
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$ | 95,538 |
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$ | 90,450 |
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Less: valuation allowance |
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(95,538 | ) |
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(90,450 | ) |
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Net deferred tax asset |
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$ | - |
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$ | 0 |
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The difference between the effective rate reflected in the provision for income taxes on loss before taxes and the amounts determined by applying the applicable statutory U.S. tax rate for the years ended December 31, 2017 and 2016 are analyzed below:
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2017 |
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2016 |
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Statutory tax benefit |
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(34 | )% |
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(34 | )% |
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Provisional remeasurement of deferred taxes |
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13 |
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- |
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Permanent items |
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- |
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- |
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Change in deferred tax asset valuation allowance |
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21 | % |
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34 | % |
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Provision for income taxes |
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- |
% |
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- |
% |