Income Taxes

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

6. Income Taxes

Deferred taxes are recorded for all existing temporary differences in the Company's assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there was no net deferred tax benefit or expense for the years ended December 31, 2016 and 2015.

There is no current or deferred income tax expense or benefit allocated to continuing operations for the years ended December 31, 2016 or 2015.

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:

	2016			2015
Tax expense (benefit) at U.S. statutory rate	$	(56,100	)	$	(942,000	)
State income tax expense (benefit), net of federal benefit		(6,000	)		(100,670	)
Effect of non-deductible expenses		-			-
Change in tax rate		746,900			-
Change in valuation allowance		(684,800	)		1,042,670
	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are as follows:

	2016			2015
Deferred tax assets (liability), noncurrent:
Capitalized start-up costs	$	6,558,000			5,658,600
Net operating loss		209,300			1,788,100
Stock compensation		224,500			229,600
Accrued expenses		-			-
Contribution carryover		2,400			2,700
Valuation allowance		(6,994,200	)		(7,679,000	)
	$	-		$	-

Change in valuation allowance:

	2016
Balance, December 31, 2015	$	(7,679,000	)
Decrease in valuation allowance		684,800
Balance, December 31, 2016		(6,994,200	)

Since Company management anticipates it is more likely than not that the net deferred tax assets will not provide future benefit, the Company has established a 100 percent valuation allowance on the net deferred tax assets as of December 31, 2016 and 2015.

As of December 31, 2015, the Company had federal and state net operating loss carry-forwards totaling approximately $616,000 which begin expiring in 2023.

We are subject to income tax audits by the Internal Revenue Service and the State of Florida for the years 2013 – 2016.