8. INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

NOTE 8 - INCOME TAXES

In December 2014, the Company underwent a change in control which subjected it to limitations under Internal Revenue Code Section 382. That section restricts post-change annual net operating loss utilization, based on applying an IRS- prescribed rate to the purchase price of the stock acquired in the change in control. The Company accordingly revised its estimates of net operating loss carry forwards, resulting in a reduction in the estimate of losses available for utilization in the amount of approximately $872,000.

A reconciliation of income tax benefit to the amount computed at the estimated rate of 34% (2018 – 34%) is as follows:

	2019			2018
Expected income tax recovery	$	100,900		$	113,100
Adjustment for non-deductible amounts		(78,900	)		(93,100	)
Increase in valuation allowance		(22,000	)		(20,000	)
	$	-		$	-

Significant components of deferred income tax assets are as follows:

	2019			2018
Deferred income tax assets
Net operating losses carried forward	$	365,400		$	343,400
Valuation allowance		(365,400	)		(343,400	)
	$	-		$	-

The Company has approximately $1,075,000 (2018: $1,010,000) in net operating losses carried forward which will expire by 2039 if not utilized. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance.

The Company’s net operating losses carried forward for United States income tax purposes will expire if not utilized, as follows:

2032	$	116,010
2033		6,445
2034		6,445
2035		315,203
2036		263,003
2037		244,111
2038		58,752
2039		64,632
	$	1,074,601

Realization of the above losses carried forward is dependent on the Company filing the applicable tax returns with the tax authorities and generating sufficient taxable income prior to expiration of the losses carried forward. Continuing use of the acquired historic business or a significant portion of the acquired assets for two years after a change of control transaction is required, otherwise the annual net operating loss limitation on pre-change losses is zero. The two year continuing use requirement has been met.