Annual report pursuant to Section 13 and 15(d)

Income tax

v3.8.0.1
Income tax
12 Months Ended
Dec. 31, 2016
Income tax  
Income tax

 

Note 15 - Income tax

 

The Company and its subsidiary, WCI, are taxed as C-Corporations for federal income tax purposes. CAST, MCB and CCH were LLCs which were disregarded entities for income tax purposes, therefore, CAST’s, MCB’s and CCH’s taxable income or loss is reported by their respective shareholders.

 

The provision (benefit) for income taxes for the years ended December 31, 2016 and 2015 consist of the following:

 

 

2016

2015

Current:

 

 

 

  Federal

$

-

$

-

  State

 

10,400

3,163

 

 

10,400

3,163

Deferred:

 

 

 

  Federal

 

237,100

364,700

  State

 

61,800

83,000

  Change in valuation

 

(298,900)

(447,700)

 

Total provision (benefit)

$

10,400

$

3,163

 

The Company has net deferred tax assets resulting from a timing difference in recognition of deferred revenue and from net operating loss carryforwards.

 

At December 31, 2016, the Company had approximately $5,200,000 of federal net operating loss carryforwards that begin expiring in 2032, $3,900,000 of California net operating loss carryforwards that begin expiring in 2022, and $1,700,000 of Arizona net operating loss carryforwards that begin expiring in 2027.

 

The income tax provision (benefit) differs from the amount computed by applying the US federal income tax rate of 34% to net income (loss) before income taxes for the years ended December 31, 2016 and 2015 as a result of the following:

 

 

2016

2015

Net income (loss) before taxes

$

(802,341)

$

(761,632)

US federal income tax rate

 

34%

34%

 

 

Computed expected tax provision (benefit)

 

(272,796)

(258,955)

Permanent differences and other

 

35,696

(105,745)

Change in valuation

 

237,100

364,700

  Federal income tax provision

$

-

$

-

 

The significant components of deferred income tax assets as of December 31, 2016 and 2015 after applying enacted corporate income tax rates are as follows:

 

2016

2015

 

Net Operating Losses carried forward

$

2,249,800

$

1,967,000

Deferred officer bonus and other

204,800

118,700

Valuation allowance

(2,454,600)

(2,155,700)

$

-

$

-