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Income taxes

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

12. Income taxes

The provision for income taxes differs from the amount obtained by applying the applicable Federal income tax rate of 21% and 34% at year ends 2018 and 2017, respectively to income before income taxes. The difference relates to the following items:

		2018				2017
Statutory tax rate			21%				34%

Expected tax benefit		$	(214,000	)		$	(280,000	)
Nondeductible expenses			0				0
Increase in valuation allowance			214,000				280,000

Tax provision (benefit) as reported		$	0			$	0

The components of deferred income taxes at December 31, are as follows:

		2018				2017
Deferred tax assets:
Loss carry-forwards		$	2,278,000			$	2,065,000
Valuation allowance			(2,278,000	)			(2,065,000	)

Net deferred taxes		$	0			$	0

At December 31, 2018, the Company has accumulated net operating loss carryforwards totaling approximately $10,800,000 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 periods ended December 31, 2018 and 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 2014. 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.