11.

INCOME TAXES

The Company did not have income tax provision (benefit) due to net loss and deferred tax assets having a full valuation allowances as of and for the year ended December 31, 2019 and 2018.

The provision for income taxes differs from the amounts computed by applying the federal statutory tax rate of 21% to earnings before income taxes, as follows:

	Years Ended December 31,
	2019			2018

Book income at statutory rate		21.00	%		21.00	%
Others		0	%		-0.80	%
Change in Valuation Allowance		-21.00	%		-20.14	%

Effective income tax rate		0	%		0.06	%

Deferred tax assets and liabilities consist of the following tax-effected temporary differences:

	December 31, 2019			December 31, 2018

Deferred tax assets (liabilities):
Charitable contributions	$	-		$	(3,700	)
Unearned revenue		-			(75,600	)
Depreciation		-			(26,300	)
Net operating loss carryforward		498,888			612,800

Total deferred tax assets, net		498,888			507,200
Valuation allowance		(498,888	)		(507,300	)

Net deferred tax assets (liabilities)	$	-		$	(100	)

The Company uses the liability method of accounting for income taxes as set forth in ASC 740. Under the liability method, deferred taxes are determined based on differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. As of December 31, 2019, the Company had federal and California net operating loss carryforwards of approximately $2.4 million. The federal and California net operating loss carryforwards will expire at various dates from 2026 through 2028; however, $2.4 million of the Federal operating loss does not expire and will be carried forward indefinitely.

As of December 31, 2019 and 2018, the Company maintained full valuation allowance for net operating loss carryforward deferred tax asset. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income are reduced.

The Company files a consolidated federal income tax return and files tax returns in various state and local jurisdictions. The statutes of limitations for its consolidated federal income tax returns are open for years 2016 and after, and state and local income tax returns are open for years 2015 and after.