The Company did not incur current tax expense for the year ended September 30, 2017 or 2016.

At September 30, 2017, the Company had available approximately $4.45 million of net operating loss carry forwards which expire in the years 2029 through 2036. However, the use of the net operating loss carryforwards generated prior to September 30, 2011 totaling $0.7 million is limited under Section 382 of the Internal Revenue Code. Section 382 of the Internal Revenue Code of 1986, as amended (the Code), imposes an annual limitation on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation experiences an “ownership change” as defined in Section 382 of the Code.

Significant components of the Company’s deferred tax assets at September 30, 2017 and 2016 are as follows:

Due to the uncertainty of their realization, a valuation allowance has been established for all of the income tax benefit for these deferred tax assets.

The following is a reconciliation of the Company’s income tax rate using the federal statutory rate to the actual income tax rate as of September 30, 2017 and 2016:

At September 30, 2017 and 2016, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. As of September 30, 2017 and 2016 the Company has not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

The Company files its federal income tax returns under a statute of limitations. The 2014 through 2017 tax years generally remain subject to examination by federal tax authorities. 

On December 22, 2017, new tax legislation came into effect. The provisions are generally effective for years beginning on or after January 1, 2018. The most impactful item to the Company in the new law is the change in tax rate from 34% to 21%. This will reduce the gross deferred tax assets prior to existing full valuation allowance from an effective rate of 40% to an effective rate of 27%. The current provision and disclosures do not reflect the new tax legislation. Had this legislation passed prior to our September 30 fiscal year-end, the effect would have been a reduction in deferred tax assets, and the corresponding valuation allowance, of approximately $1,200,000, as of September 30, 2017. Given the full valuation allowance, the change is not expected to have a significant impact on the financial statements.