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Income taxes
 12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
8. Income taxes

The provision for income taxes differs from the amount obtained by applying the Federal income tax rate of 34% to income before income taxes. The difference relates to the following items:

 

    2017     2016  
Statutory tax rate  

 

34%

    

 

34%

  
                 
Expected tax benefit   $ (280,000 )   $ (129,000 )
Nondeductible expenses     0       101,000  
Benefit of losses not recognized     280,000       28,000  
                 
Tax provision (benefit) as reported   $ 0     $ 0  
                 

 

 

The components of deferred income taxes at December 31, are as follows:  
             
    2017     2016  
Deferred tax assets:            
Loss carry-forwards   $ 2,065,000     $ 2,960,000  
Valuation allowance     (2,065,000 )     (2,960,000 )
                 
Net deferred taxes   $ 0     $ 0  
                 

 

At December 31, 2017, the Company has accumulated net operating loss carryforwards totaling approximately $9,800,000 which   begin to expire if not utilized starting in 2018.

 

On December 22, 2017 H.R. 1, originally known as the Tax Cuts and Jobs Act, (the "Tax Act") was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate ("Federal Tax Rate") from 35% to 21% effective  January 1, 2018.  The Company must re-measure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. Accordingly, the Company utilized a 21% tax rate to evaluate its net deferred taxes for the period ended December 31, 2017.

 

Utilization of the Company's loss carryforwards is dependent on realizing taxable income. Deferred tax assets for these carryforwards have been reduced by a valuation allowance up to an amount equal to estimated deferred tax liability.

 

The Company is no longer subject to income tax examinations by tax authorities for years before 2013.  The Company is not currently the subject of any income tax examinations by any tax authorities.

 

Based upon a review of its income tax filing positions, the Company believes that its positions would be sustained upon an audit and does not anticipate any adjustments that would result in a material change to its financial position.  Therefore, no reserves for uncertain income tax positions have been recorded.  The Company recognizes interest related to income taxes as interest expense and penalties as operating expenses.