NOTE 9 - INCOME TAXES

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Kingold is incorporated in the United States and has incurred net operating losses for income tax purposes for 2015 and 2014. The Company has loss carry forwards of approximately $14,902,000 for U.S. income tax purposes available for offsetting against future taxable U.S. income, expiring in 2035. Management believes that the realization of the benefits from these losses is uncertain due to its history of continuing losses in the United States. Accordingly, a full deferred tax asset valuation allowance has been provided and no deferred tax asset benefit has been recorded. The valuation allowance as of September 30, 2015 and December 31, 2014 was approximately $5,067,000 and $4,732,000, respectively. The net increase in the valuation allowance for the nine and three months ended September 30, 2015 was $335,000 and $66,000, respectively.

Dragon Lead is incorporated in the British Virgin Islands (the “BVI”), and under current laws of the BVI, income earned is not subject to income tax.

Wuhan Vogue-Show, Wuhan Kingold and Kingold Internet are incorporated in the PRC and are subject to PRC income tax, which is computed according to the relevant laws and regulations in the PRC. The applicable tax rate is 25% for the nine months ended September 30, 2015 and 2014.

The Company recorded $1.31 million deferred income tax liability-non-current as of September 30, 2015 compared to $0 as of December 31, 2014, from its foreign operations, which was related to the tax effect arising from capitalized interest incurred on the Kingold Jewelry Park construction.

The Company intends to reinvest its foreign profits indefinitely in order to avoid a tax liability upon repatriation to the United States.

Income (loss) from continuing operations before income taxes was allocated between the U.S. and foreign components for the three and nine months ended September 30, 2015 and 2014:

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014

United States	$	(194,487)	$	(864,242)	$	(985,192)	$	(3,172,630)
Foreign		12,108,862		7,895,779		21,610,455		56,690,297
		11,914,375		7,031,537		20,625,263		53,517,667

The components of deferred tax assets and deferred tax liability as of September 30, 2015 and December 31, 2014 consist of the following:

	As of
	September 30,		December 31,
	2015		2014
Deferred tax assets:
Deferred tax assets from net operating loss carry-forwards for parent company	$	5,067,000	$	4,732,000
Valuation allowance		(5,067,000)		(4,732,000)
Deferred tax assets	$	-	$	-

Deferred tax liability:
Deferred tax liability from capitalized interest on the Jewelry Park project	$	1,307,187	$	-
Deferred tax liability-long term	$	1,307,187	$	-