Entity information:

14.    INCOME TAXES

 

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

 

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $4,695,634 which is calculated by multiplying a 34.5% estimated tax rate by the cumulative net operating loss (NOL) adjusted for the following items:

 

The components of the Company's deferred tax asset as of December 31, 2017 and 2016 are as follows:

 

For the period ended December 31,  2017  2016
Book loss for the year  $(1,826,808)  $(2,050,847)
Adjustments:         
Book to tax depreciation expense   14,009    14,669
Prior period adjustment   —      —  
Non-deductible portion of travel and entertainment   2,496    1,584
Non-deductible amortization of debt discount   914,482    648,139
Non-deductible portion of stock compensation   223,090    145,746
Non-deductible accrued salaries and wages   349,497    368,323
Non-deductible penalties         
Tax loss for the year   (323,234)   (872,386)
Estimated effective tax rate   34.5%   34.5%
Deferred tax asset  $(111,516)  $(300,973)

 

 

SKINVISIBLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AUDITED)

 

As of December 31,   2017   2016
Deferred tax asset   $ 4,695,634   $ 4,584,118
Valuation allowance     (4,695,634)     (4,584,118)
Current taxes payable                       -                          -   
Income tax expense   $                   -       $                   -   

 

Below is a chart showing the total estimated corporate federal net operating loss (NOL) and the year in which it will expire.

 

Year   Amount   Expiration
  2017     $ 111,516       2037  
  2016     $ 872,386       2036  
  2015     $ 1,215,078       2035  
  2014     $ 1,300,779       2034  
  2013     $ 830,584       2033  
  2012     $ 581,538       2032  
  2011     $ 197,306       2026  
  2010     $ 617,306       2025  
  2009     $ 1,153,315       2024  
  2008     $ 1,131,018       2023  
  2007     $ 907,491       2022  
  2006     $ 1,191,128       2021  
  2005     $ 763,406       2020  
  2004     $ 2,525,963       2019  
  Total     $ 13,398,814          

 

The Company will file its U.S. federal return for the year ended December 31, 2017 upon the issuance of this filing. The tax years 2014-2016 remained open to examination for federal income tax purposes by the major tax jurisdictions to which the Company is subject. No tax returns are currently under examination by any tax authorities.