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10. INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes.” This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carry forwards.

A 100% valuation allowance has been provided for all deferred tax assets, as the ability of the Company to generate sufficient taxable income in the future is uncertain.

The unexpired net operating loss carry forward at December 31, 2018 is approximately $34,859,000 with various expiration dates between 2019 and 2037 if not utilized. All tax years starting with 2015 are open for examination.

Non-current deferred tax asset:

		2018				2017
Net operating loss carry forwards, (21% as of December 31, 2018 and 21% as of December 31, 2017		$	7,320,390			$	7,295,315
Valuation allowance			(7,320,390	)			(7,295,315
Net non-current deferred tax asset		$	-			$	-

Reconciliations of the expected federal income tax benefit based on the statutory income tax rate of 21% to the actual benefit for the years ended December 31, 2018 and 2017 are listed below.

		2018				2017
Expected federal income tax benefit		$	124,448			$	(112,645	)
Goodwill amortization			87,944				142,386
Gain on settlement of debt			-				114,757
NOL carryover reduced by settlement of debt			-				(114,403	)
Change in valuation allowance			(13,959	)			(11,807	)
Expired capital loss carryover			-				(9,227	)
NOL carryover reduced by expiration			(151,658	)			-
Other – M&E			(7,888	)			(9,061	)
Reserve for obsolete inventory			(20,357	)			-
Pass through entity income allocation			(10,033	)			-
Reserve for bad debt			(3,971	)			-
Stock-based compensation			(4,526	)			-
Income tax expense (benefit)		$	-			$	-

The Company has no tax positions at December 31, 2018 and 2017 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended December 31, 2018 and 2017, the Company recognized no interest and penalties.

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- References

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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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