Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

12

–

INCOME TAXES

We

did

not

have any provision for income taxes for the years ended

December 31, 2017,

2016

and

2015.

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows:

	Year Ended December 31,
	2017			2016			2015
Income taxes computed at the federal statutory rate	$	(5,241,627	)	$	(2,555,151	)	$	(793,904	)
Effect of:
(Income) loss taxed as partnership		(552,081	)		2,555,151			793,904
State taxes, net of federal benefits		(610,495	)		—			—
Change in valuation allowance		4,464,141			—			—
Change in enacted tax rates		2,119,340			—			—
Change in tax status		(205,453	)		—			—
Other, net		26,175			—			—
Total	$	—		$	—		$	—

Deferred tax assets and liabilities are as follows:

	December 31,
	2017			2016
Deferred tax assets:
Loss carryforwards U.S. - Federal/States	$	13,499,628		$	—
Asset retirement obligations		3,178,064			—
Equity-based compensation		802,843			—
Total deferred tax assets		17,480,535			—
Less valuation allowance		(4,464,141	)		—
Deferred tax assets, net		13,016,394			—
Deferred tax liabilities:
Property, plant & equipment		(13,016,394	)		—
Net deferred tax assets, net of valuation allowance	$	—		$	—

As of

December 

31,

2017,

our federal and state net operating loss carryforwards for income tax purposes were approximately

$52.4

million and

$42.0

million, respectively. If

not

utilized, the federal and state net operating loss carryforwards will expire in

2037.

A valuation allowance has been recorded against our deferred tax assets given our limited operating history.

Tax Cuts and Jobs Act

On

December 22, 2017

, the U.S. Government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the “Act”). The Act makes broad and complex changes to the U.S. tax code, including but

not

limited to, reducing the U.S. federal corporate rate from

35%

to

21%,

allowing full expensing of qualified property acquired and placed in service after

September 27, 2017

and imposing new limits on the deduction of net operating losses, executive compensation and net interest expense. There was

no

impact of the Act on our

2017

financial statements as t

he revaluation of our deferred tax assets and liabilities of

$2.1

 million was offset by the valuation allowance.