Deferred Tax Assets

At May 31, 2020 and 2019, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $71,245 and $38,699, respectively, that may be offset against future taxable income through 2038. No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Company’s net deferred tax assets of approximately $14,961, was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a full valuation allowance.

Components of deferred tax assets are as follows:

	May 31, 2020			May 31, 2019
Net deferred tax assets – Non-current:
Expected income tax benefit from NOL carry-forwards	$	14,961		$	8,127
Less valuation allowance		(14,961	)		(8,127	)
Deferred tax assets, net of valuation allowance	$	-		$	-

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realizability. The valuation allowance increased approximately $6,834 during the year ended May 31, 2020 and $6,378 during the year ended May 31, 2019.

Income Tax Provision in the Statements of Operations

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

	For the Year Ended May 31, 2020			For the Year Ended May 31, 2019

Federal statutory income tax rate		21.0	%		21.0	%
Change in valuation allowance on net operating loss carry-forwards		(21.0	)%		(21.0	)%
Effective income tax rate		0.00	%		0.00	%

We follow ASC 740 Accounting for Uncertainty in Income Taxes. Under ASC 740, tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. We had no liabilities for unrecognized tax benefits at May 31, 2020 and 2019.

Our policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended May 31, 2020 and 2019, we did not recognize any interest or penalties in our statement of operations, nor did we have any interest or penalties accrued in our balance sheet at May 31, 2020 and 2019 relating to unrecognized tax benefits.

The tax years 2018-2020 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.