Income Taxes

3 Months Ended

Nov. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at August 31, 2019 and November 30, 2019, are as follows: 

	November 30, 2019			August 31, 2019
Deferred tax assets:
Net operating loss carryforwards	$	385,437		$	212,618
Capitalized research and development		-------			-
Research and development credit carry forward		1,963			1,963
Total deferred tax assets		387,400			214,581
Less: valuation allowance		(387,400	)		(214,581	)
Net deferred tax asset	$	—		$	—

The net increase in the valuation allowance for deferred tax assets was $172,819 for the three months ended November 30, 2019. The Company evaluates its valuation allowance on an annual basis based on projected future operations. When circumstances change and this causes a change in management’s judgment about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.

For federal income tax purposes, the Company has net U.S. operating loss carry forwards at November 30, 2019 available to offset future federal taxable income, if any, of $1,127,601 which will fully expire by the fiscal year ended August 31, 2039.  Accordingly, there is no current tax expense for the three months ended November 30, 2019. In addition, the Company has research and development tax credit carry forwards of $1,923 at November 30, 2019, which are available to offset federal income taxes and fully expire by November 30, 2039.

The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.

The effects of state income taxes were insignificant for the three months ended November 30, 2019 and November 30, 2018.