INCOME TAXES

12 Months Ended

Jan. 31, 2018

Notes to Financial Statements

NOTE 12. INCOME TAXES

The Company provides for income taxes under ASC 740, “Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. It also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company is subject to taxation in the United States and China.

The statutory federal income tax rate of the United States is 34%. The statutory federal income tax rate of China is 25%.

As of January 31, 2017, the Company has loss carry forwards for US Federal income taxes of approximately $390,800 and for Chinese income taxes of approximately $340,900. US Federal net operating loss carryforwards may be carried forward up to a maximum of 20 years and will begin expiring in 2032. The utilization of these NOLs may become subject to limitations based on past and future changes in ownership of the Company pursuant to Internal Revenue Code Section 382. Chinese net operating loss carryforwards may be carried forward up to a maximum of 5 years and will begin expiring in 2021. At January 31, 2018 and 2017, Tieshan Oil and Amuli had $6,476 and $9,289 income tax payable for prior years’ income.

The deferred tax assets created from current and prior year net operating loss carry forwards have been calculated at 34% rate in the United States and the 25% rate in China. Deferred tax assets were comprised of the following as of January 31, 2018 and 2017:

	January 31,			January 31,
	2018			2017
NOL carryforward
Total deferred tax asset	$	220,410		$	156,869
Total deferred tax liabilities		-			-
Less valuation allowance		(220,410	)		(156,869	)
Net deferred tax asset	$	-		$	-

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company has completed the accounting for the effects of the Act during the quarter ended December 31, 2017. The Company’s financial statements for the year ended December 31, 2017 reflect certain effects of the Act which includes a reduction in the corporate tax rate from 34% to 21% as well as other changes.

The benefit for income taxes differed from the amount computed using the statutory United State tax rate of 34% for January 31, 2018 and 2017 as follows:

	Year Ended January 31,
	2018			2017
Income tax benefit at statutory rate	$	(130,332	)	$	(726,844	)
Difference in rates		15,984			12,453
Effect of change in statutory rate		50,807			-
Non-deductible expenses		-			648,485
Change in valuation allowance		63,541			65,906
Income tax benefit	$	-		$	-

The Company records a valuation allowance against deferred tax assets to the extent that it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Due to the substantial doubt related to the Company’s ability to continue as a going concern and utilize its deferred tax assets, a valuation allowance for the full amount of the deferred tax assets has been established at January 31, 2017. As a result of this valuation allowance there are no income tax benefits reflected in the accompanying statement of operations to offset pre-tax losses.

The Company has no uncertain tax positions as of January 31, 2018 and 2017 due to limited nature of its operations. Income taxes for the years ended January 31, 2013 through 2015 remain subject to examination.