Entity information:

The tax effects of significant temporary differences representing deferred tax assets at

December 31, 2016 and 2015, are as follows:

 

    2016     2015  
Deferred tax assets (liabilities):            
     Net operating loss carryforward   $ 5,702,400     $ 5,453,200  
     Accrued commissions     285,900       324,600  
     Accrued vacation     32,500       35,900  
     AMT tax credit carryforward     6,600       6,600  
     Fixed assets     (2,100 )     48,200  
     Other     6,000       8,000  
Subtotal     6,031,300       5,876,500  
Valuation allowance     (6,031,300 )     (5,876,500 )
Total   $ -     $ -  

 

The provision for income taxes is at an effective rate different from the federal statutory rate due principally to the following:

 

     December 31,  
    2016     2015  
(Loss) income before taxes   $ (553,681 )   $ 78,330  
Income tax (benefit) expense on above amount at federal statutory rate   $ (188,300 )   $ 26,600  
State income tax (benefit) expense, net of federal (benefit) expense     (22,100 )     3,100  
Permanent differences     6,000       6,600  
Other     49,600       (6,800 )
Change in valuation allowance     154,800       (29,500 )
Provision for income taxes   $ -     $ -  

 

 

 

Income tax expense for the years ended December 31, 2016 and 2015 consists of the following:

 

     December 31,  
Current income taxes   2016     2015  
Federal   $ -     $ 13,800  
State     -       1,600  
Alternative minimum tax     -       -  
Benefit from utilization of net operating losses     -       (15,400 )
      -       -  
Deferred taxes     -       -  
    $ -     $ -  

 

The Company has recorded a valuation allowance to the full extent of its currently available net deferred tax assets which the Company determined to be not more-likely-than-not realizable. The Company has net operating loss carryforwards of approximately $15.0 million, which expire, if unused, between the years 2017 and 2036.

 

The Company may have been deemed to have experienced changes in ownership which may impose limitations on its ability to utilize net operating loss carryforwards under Section 382 of the Internal Revenue Code. However, as the deferred tax asset is fully offset by a valuation allowance, the Company has not yet conducted a Section 382 study to determine the extent of any such limitations.

 

The Company has analyzed its income tax positions using the criteria required by U.S. GAAP and concluded that as of December 31, 2016 and 2015, it has no material uncertain tax positions and no interest or penalties have been accrued. The Company has elected to recognize any estimated penalties and interest on its income tax liabilities as a component of its provision for income taxes.

 

The income tax returns of the Company for 2013, 2014, and 2015 are subject to examination by income taxing authorities, generally for three years after each was filed.