Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.3.1.900
Income Taxes
12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 5 - INCOME TAXES

 

The provision for income taxes is as follows:

 

    December 31,
    2015   2014
Federal:                
     Current   $ —       $ —    
     Deferred     —         1,040,000  
      —         1,040,000  
State:                
     Current     —         —    
     Deferred     —         —    
      —         —    
Provision for Income Taxes   $ —       $ 1,040,000  

 

A reconciliation of the provision for income taxes computed using the US statutory federal income tax rate is as follows:

 

    December 31,
    2015   2014
Tax provision at US statutory federal income tax rate   $ (3,041,000 )   $ 1,098,000  
State income tax, net of federal benefit     —         —    
Depreciation     9,000       18,000  
Related party accrued interest     —         (282,000 )
Gains and losses on marketable securities     899,000       (691,000 )
Stock based compensation     817,000       336,000  
Loss on disposal of subsidiary     387,000       —    
Net operating losses carry forwards     —         845,000  
Other     92,000       —    
Change in valuation allowances     837,000       (284,000 )
     Provision for Income Taxes   $ —       $ 1,040,000  

 

The significant components of the Company’s deferred tax assets were:

 

    December 31,
    2015   2014
Deferred Tax Assets:                
     Net operating loss carry forward   $ 1,381,000     $ 334,000  
     Unrealized losses on marketable securities     518,000       375,000  
     Stock based compensation     —         336,000  
     Depreciation and other     6,000       23,000  
      1,905,000       1,068,000  
Less valuation allowance     (1,905,000 )     (1,068,000 )
Net Deferred Tax Asset   $ —       $ —    

 

Deferred tax assets and liabilities reflect the effects of tax losses, credits and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

 

As of December 31, 2015, the Company recorded valuation allowance of $1,905,000 for its deferred tax assets. The Company believes that such assets did not meet the more likely than not criteria to be recoverable through projected future profitable operations in the foreseeable future.

 

Effective January 1, 2007, the Company adopted FASB guidance that addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The FASB also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2015 and 2014, the Company does not have a liability for unrecognized tax benefits.

 

The Company’s net operating loss carry forward for income tax purposes as of December 31, 2015 was approximately $2,727,000 and may be offset against future taxable income through 2035. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

 

Uncertain Tax Positions

 

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In many cases the Company’s uncertain tax positions are related to tax years that remain subject to examination by relevant tax authorities. The Company is generally no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years before 2012. However, as of December 31, 2015, the years subsequent to 2012 remain open and could be subject to examination by tax authorities including the U.S. Internal Revenue Service and major state and local tax jurisdictions in the United States.

 

Interest costs related to unrecognized tax benefits are classified as “Interest expense, net” in the accompanying consolidated statements of operations. Penalties, if any, would be recognized as a component of “General and administrative expenses.”

 

As of December 31, 2015, the Company had no liability for unrecognized tax benefits and no accrual for the payment of related interest and penalties, nor did the Company recognized any interest or penalties expense related to unrecognized tax benefits during the years ended December 31, 2015 or 2014.