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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 8 – INCOME TAXES

At December 31, 2018, the Company has approximately $4,237,000 of operating loss carryforwards for federal that may be applied against future taxable income. The net operating loss carryforwards will begin to expire in the year 2021 if not utilized prior to that date, expiring during various year through 2037. There is no provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The net operating loss carryforwards could be subject to limitation in any given year in the event of a change in ownership as defined by IRC Section 382.

The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 34% to 21%. The most significant impact of the legislation for the Company was a $242,000 reduction of the value of net deferred tax assets (which represent future tax benefits) as a result of lowering the U.S. corporate income tax rate from statutory rate of 34% to 21%.

The valuation allowance overall increased by approximately $324,000 during the year ended 2018 and decreased by approximately $343,000 during the year 2017 and was approximately $1,562,000 and $1,238,000 at December 31, 2018 and 2017, respectively. The Company has fully reserved the deferred tax asset resulting from available net operating loss carryforwards.

The income tax provision charged to continuing operations for the years ended December 31, 2018 and 2017 was as follows:

Current:
U.S. federal		$	(98,900	)		$	-
State and local			(29,600	)			-
		$	(128,500	)		$	-
Deferred:
U.S. federal			3,000				-
State and local			1,000				-
		$	4,000			$	-

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the years ended December 31, 2018, and 2017, due to the following:

Computed "expected" tax expense (benefit)		$	(287,000	)		$	(256,000	)
Increase (decrease) in income taxes resulting from:
Nondeductible expenses			242,000				228,000
State and local taxes, net of federal tax benefit			(82,000	)			(73,000	)
Enacted future rate changes			-				(242,000	)
Change in valuation allowance			(324,000	)			343,000
Other			326,500				-
		$	(124,500	)		$	-

Net deferred tax liabilities consist of the following components as of December 31, 2018 and 2017:

Deferred tax Liability:
Intangible Assets		$	3,000			$	-
			3,000				-
Deferred tax assets:
Inventory allowances			3,000				3,000
Returns reserve			9,000				-
Stock-based compensation			562,000				387,000
Net operating loss carryforwards			989,000				848,000
			1,563,000				1,238,000
Less valuation allowance			(1,563,000	)			(1,238,000	)
			-				-
		$	3,000			$	-

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- References

No definition available.

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- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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