Income taxes are accounted for in accordance with FASB ASC 740, which requires the recognition of deferred tax assets and liabilities to reflect the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of the Company's assets and liabilities result in a deferred tax asset, the guidance requires an evaluation of the probability of being able to realize the future benefits indicated by such assets. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or the entire deferred tax asset will not be realized.
The Company has net operating losses at December 31, 2016 of $3,358,663 expiring through 2035. Utilization of these losses may be limited by the "change of ownership" rules as set forth in section 382 of the Internal Revenue Code.
The difference between the expected income tax expense (benefit) and the actual tax expense (benefit) computed by using the federal statutory rate of 35% is as follows:
| For the period from January 13, 2014 (date of inception) through December 31, 2016 |
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| Expected income tax benefit (loss) at statutory rate of 35% | $ | 1,175,532 | ||
| Change in valuation account | (1,175,532 | ) | ||
| Income tax expense (benefit) | $ | -0- | ||
Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset, are as follows:
| 2016 | ||||
| Deferred Tax Assets: | ||||
| Tax Benefit of net operating loss carry-forward | $ | 1,175,532 | ||
| Less: valuation allowance | (1,175,532 | ) | ||
| Deferred tax assets | -0- | |||
| Deferred tax liabilities | -0- | |||
| Net deferred tax asset | $ | -0- | ||
The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure.
Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Company’s financial statements. The Company’s policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense.