Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11 – INCOME TAXES

The following table presents the current and deferred tax provision for federal and state income taxes for the years ended December 31, 2017 and 2016.

	Year Ended December 31,
	2017			2016
Current tax provision
Federal	$	-		$	-
State		2,800			2,940
Total	$	2,800		$	2,940
Deferred tax provision (benefit)
Federal		1,980,983			(382,631	)
State		(13,570	)		(76,619	)
Valuation allowance		(1,967,413	)		459,250
Total		-
Total provision for income taxes	$	2,800		$	2,940

Current taxes in 2017 and 2016 consist primarily of minimum state taxes.

Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended December 31, 2017 and 2016 are as follows:

	Year Ended December 31,
	2017			2016
US federal statutory income tax rate		30	%		30
State tax - net of benefit		4	%		4	%
		34	%		34	%
Permanent differences		(12	)%		2	%
Reserves and accruals		(5	)%		(21	)%
Estimated change in federal tax rate		(137	)%		-
Changes in deferred tax assets		4	%		32	%
Other		(8	)%		(9	)%
Increase in valuation allowance		123	%		(38	)%
Effective tax rate		0	%		0	%

The components of the Company’s deferred tax assets for federal and state income taxes as of December 31, 2017 and 2016 consisted of the following:

	2017			2016
Deferred income tax assets
Net operating loss carryforwards	$	5,926,021		$	7,927,043
Reserves and accruals		355,057			321,448
Valuation allowance		(6,281,078	)		(8,248,491	)
	$	-		$	-

The Company’s deferred tax assets consist primarily of net operating loss (“NOL”) carry forwards of approximately $5,926,000 and $7,927,000 at December 31, 2017 and 2016, respectively. At December 31, 2017, the Company had NOL carry forwards for Federal and California income tax purposes totaling approximately $23.8 million and $23.2 million, respectively. At December 31, 2016, the Company had NOL carry forwards for Federal and California income tax purposes totaling approximately $23.4 million and $22.2 million, respectively. The Company’s valuation allowance decreased by approximately $2 million for the year ended December 31, 2017, and increased by approximately $459,000 for the year ended December 31, 2016. Federal and California NOL’s have begun to expire and fully expire in 2037. For federal tax purposes these carry forwards expire in twenty years beginning in 2026.

Income tax reporting primarily relates to the business of the parent company Blue Fire Ethanol Fuels, Inc. which has experienced a change in ownership due to the significant amount of common stock which has been issued to satisfy convertible notes payable. A change in ownership requires management to compute the annual limitation under Section 382 of the Internal Revenue Code. The amount of benefits the Company may receive from the operating loss carry forwards for income tax purposes is further dependent, in part, upon the tax laws in effect, the future earnings of the Company, and other future events, the effects of which cannot be determined.

The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal return years 2015 through 2017 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the years ended 2014 through 2017 and currently does not have any ongoing tax examinations.

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

In addition, the Company is not current in their federal and state income tax filings prior to the reverse acquisition. The Company has assessed and determined that the effect of non filing is not expected to be significant, as Sucre has not had active operations for a significant period of time.