Provisions for Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Provisions for Income Taxes

note 8 - provision for income taxes

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under ASC Topic 740, Income Taxes, to give effect to the resulting temporary differences which may arise from differences in the bases of fixed assets, depreciation methods, allowances, and start-up costs based on the income taxes expected to be payable in future years. Exploration and development stage deferred tax assets arising as a result of net operating loss carry forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Tax operating loss carry forwards generated during the period from January 23, 2007 (date of inception) through September 30, 2016 of approximately $19.2 million will begin to expire in 2027. Accordingly, deferred tax assets of approximately $7,900,000 (2015 – $7,594,000) related to net operating loss carryforwards and $290,000 related to stock-based compensation were offset in full by the valuation allowance.

The Company has no tax positions at September 30, 2016 and December 31, 2015 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company’s tax returns for the years ended December 31, 2015, 2014 and 2013 are open for examination under Federal Statute of Limitations and for the years ended December 31, 2015, 2014 and 2013 under the State of California Statute of Limitations.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company had no accruals for interest and penalties since inception.

A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax to income before provision for income taxes is as follows:

		For the Nine Months Ended September 30,
		2016		2015
Income tax (benefit) computed at
Federal statutory tax rate of 34%	$	(494.000)	$	(946,842)
Change in valuation allowance		622.000		1,193,021
State taxes (net of federal benefit)		(128,000)		(246,179)
	$	-	$	-