Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11 INCOME TAXES

U.S. Federal Corporate Income Tax

Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and tax credit and operating loss carryforward that create deferred tax assets and liabilities are as follows:

	2015			2014
Tax Operating Loss Carryforward - USA	$	10,000,000		$	8,877,000
Other		-			31,700
Valuation Allowance - USA		(10,000,000	)		(8,908,700	)
	$	-		$	-

The valuation allowance increased approximately $2.1 million, primarily as a result of the increased net operating losses of our U.S.-based segment.

As of December 31, 2015, we had federal net operating loss carryforwards for income tax purposes of approximately $25.0 million which will begin to expire in 2025. We also had Arizona and California net operating loss carryforwards for income tax purposes of approximately $19.4 million and $2.0 million, respectively, which began to expire in 2014. These carryforwards have been utilized in the determination of the deferred income taxes for financial statement purposes. The following table accounts for federal net operating loss carryforwards only.

Year Ending	Net Operating		Year of
December 31,	Loss:		Expiration
2015	$	3,400,000		2035
2014		5,230,000		2034
2013		5,600,000		2033
2012		2,850,000		2032
2011		2,427,000		2031
2010		1,799,000		2030
2009		1,750,000		2029
2008		1,308,000		2028
2007		429,000		2027
2006		476,000		2026
2005		414,000		2025

The tax provision differs from the expense that would result from applying federal statutory rates to income before income taxes due to the effect of state income taxes and because certain expenses are deducted for financial reporting that are not deductible for tax purposes.

	2015			2014
Tax Benefit of 34%	$	(1,321,000	)	$	(1,903,000	)
Increase (Decrease) in Income Taxes Resulting from:
State Income Tax Benefit, Net of Federal Tax		(159,000	)		(250,000	)
Nondeductible Expenses		511,712			365,709
Valuation Allowance		968,288			1,787,291
Total	$	-		$	-

Taiwan (Republic of China) Corporate Tax

Sole-Vision Technologies, Inc. is a subsidiary of the Company which is operating in Taiwan as a profit-seeking enterprise. Its applicable corporate income tax rate is 17%. In addition, Taiwan’s corporate tax system allows the government to levy a 10% profit retention tax on undistributed earnings for the prior year. This tax will not be provided if the company distributed the earnings before the ended of the fiscal year. 

According to the Taiwan corporate income tax (“TCIT”) reporting system, the TCIT sales cut-off base is concurrent with the business tax classified as value-added type (“VAT”) which will be reported to the Ministry of Finance (“MOF”) on a bi-monthly basis. Since the VAT and TCIT are accounted for on a VAT tax basis that recorded all sales on business tax on a VAT tax reporting system, the Company is bound to report the TCIT according to the MOF prescribed tax reporting rules. Under the VAT tax reporting system, sales cut-off did not take the accrual base but rather on a VAT taxable reporting basis. Therefore, when the company adopted US GAAP on accrual basis, the sales cut-off TCIT timing difference which derived from the VAT reporting system will create a temporary sales cut-off timing difference and this difference is reflected in the deferred tax assets or liabilities calculations on the income tax estimation reported in the Form 10-K.

Temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and VAT tax reporting system and operating loss carry forwards that create deferred tax assets and liabilities are as follows:

	December 31, 2015
	US Dollar
Tax Operating Income - Taiwan	$	327
Temporary Difference:	$	-
VAT reporting system - Sales cut-off	$	(199,028	)
VAT reporting system - Cost & expenses cut-off	$	312,583
Provision of Bad Debt	$	(82,801	)
Research & Development	$	-
Permanent Difference:	$	-
Other	$	163,433
Adjusted Net Loss Before Tax - Taiwan	$	194,514

Income tax expense (benefits) for the years ended December 31, 2015 and 2014 is summarized as follows:

	2015		2014
Current:
Provision for Federal Income Tax 34%	$	-	$	-
Provision for TCIT (17%)		-		-
Provision for Undistributed Earnings Tax (10%)		-		-
Increase (Decrease) in Income Taxes Resulting from:
Pre-acquisition TCIT		-		-
Temporary Difference		42,184		(38,322	)
Income Tax Expenses (Benefit)	$	42,184	$	(38,322	)

RECONCILIATION OF DEFERRED TAX ASSET/(LIABILITIES)

	2015
Deferred Tax Assets
Balance at Beginning of Year	$	151,355
Temporary Difference		(42,184	)
Foreign currency difference		36,420
Balance at End of Year	$	145,591