Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 9. INCOME TAXES

Components of income tax benefit are as follows:

Current income taxes:	For the Year Ended December 31, 2018		For the Year Ended December 31, 2017
Federal	$	-	$	-
State		-		-
Current provision for income taxes		3,640
Deferred provision (benefit) for income taxes:
Federal		-		-
State		-		-
Deferred provision (benefit) for income taxes		-		-
Provision for income taxes	$	3,640	$	-

The non-current deferred tax assets and liabilities consist of the following:

Deferred tax assets:
263A adjustment	$	12,295		$	14,326
Accrued expenses		-			-
Stock compensation		81,133			48,489
Stock option		58,102			44,922
Amortization of intangibles		2,965,622			2,796,867
Net operating loss		2,458,939			2,999,467
Others		39,752			12,660
Total non-current deferred tax assets		5,615,843			5,916,731
Deferred tax liabilities:
Prepaid expenses		(13,781	)		(23,301	)
Depreciation on fixed assets		(697,478	)		(853,089	)
Total non-current deferred tax liabilities		(711,259	)		(876,390	)
Net non-current deferred tax assets/liabilities		4,904,584			5,040,341
Less: Valuation Allowance		(4,904,584	)		(5,040,341	)
Total deferred tax liabilities	$	-		$	-

Reconciliation of the tax rate to the U.S. federal statutory tax rate which relate to the year ended December 31, 2018 and 2017 is as follows:

	For the Year Ended December 31, 2018			For the Year Ended December 31, 2017
Tax at federal statutory rate	$	(11,494	)	$	(80,922	)
State income taxes		2,875			-
Permanent differences		61,495			118,253
Change in valuation allowance		(135,758	)		(2,436,734	)
Other - State rate effect		(2,044	)		(9,578	)
Change in status		104,960			2,408,980
Other		(16,394	)		-
Provision for income taxes	$	3,640		$	-

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the 2017 Tax Cuts and Jobs Act (“2017 Tax Reform”). The 2017 Tax Reform significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U. S. corporate income tax rates and implementing a territorial tax system.

We have reasonably estimated the effects of the 2017 Tax Reform and recorded provisional amounts in our financial statements as of December 31, 2017. This amount is primarily comprised of the re-measurement of federal net deferred tax liabilities resulting from the permanent reduction in the U.S. statutory corporate tax rate to 21% from 35%. We also recorded a corresponding decrease in our valuation allowance for the impact of the 2017 Tax Reform of approximately $5.040 million, with minimal to no effect of our current statement of operations.

During the year ended December 31, 2018, the Company reviewed additional tax guidance provided, and implemented new internal policies to eliminate business entertainment expenses, other than business meals. We determined no revisions were necessary to the tax provision for the year ended December 31, 2017. The tax provision for the year ended December 31, 2018 is consistent with prior years and at the current U.S. corporate tax rate of 21%.