Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7 – INCOME TAXES

The Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act, or TCJA, reduced the U.S. federal corporate income tax rate from 35% to 21%. As a result, carryforwards have been recalculated to recognize the effect of future rates on deferred tax assets and liabilities. This resulted in a reduction in the deferred tax asset of approximately $62,000 in 2017 with a corresponding decrease in the valuation allowance in the same amount, for zero net impact on the financial statements.

The following table presents the current and deferred tax provision for federal and state income taxes for the years ended December 31, 2018, and 2017:

Current tax provision
Federal	$	-		$	-
State		800			800
Total	$	800		$	800
Deferred tax provision (benefit)
Federal	$	(1,482,000	)	$	(739,000	)
State		(410,000	)		(365,000	)
Valuation allowance		1,892,000			1,104,000
Total		-			-
Total provision for income taxes	$	800		$	800

The components of our deferred tax assets (liabilities) for federal and state income taxes consisted of the following as of December 31, 2017 and 2016:

	2017			2016
Deferred tax asset attributable to:
Net operating loss carryover	$	3,258,000		$	1,366,000
Valuation allowance		(3,258,000	)		(1,366,000	)
Net deferred tax asset	$	-		$	-

No federal tax provision has been provided for the years ended December 31, 2018 and 2017 due to the losses incurred during such periods. The Company’s effective tax rate is different from the federal statutory rate of 21% due primarily to operating losses that receive no tax benefit because of a valuation allowance recorded for such losses and temporary differences related to a settlement.

	2018			2017
Statutory US Federal tax rate		21.0	%		34.0	%
Permanent differences:
State income taxes, net of Federal benefit		7.0	%		5.8	%
Stock compensation		-4.8	%		-3.1	%
Other		-4.8	%		-0.8	%
Temporary differences		-0.9	%		0.6	%
Change in effective tax rate		0.0	%		-10.7	%
Valuation allowance		-17.5	%		-25.8	%
Total		0.0	%		0.0	%

Based on federal tax returns to be filed through December 31, 2018, we had available approximately $11,637,000 in recalculated U.S. and state tax net operating loss carryforwards, pursuant to the Tax Reform Act of 1986, which assesses the utilization of a Company’s net operating loss carryforwards resulting from retaining continuity of its business operations and changes within its ownership structure. Net operating loss carryforwards start to expire in 2035 or 20 years for federal income and state tax reporting purposes.