| INCOME TAXES | NOTE 5 - INCOME TAXES The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes which
requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary
reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards. At June 30,
2016 and 2015, the total of all deferred tax assets was $4,159,360 and $5,409,856, respectively, and the total of the deferred
tax assets related to goodwill was $1,830,789 and $1,319,678, respectively. The amount of and ultimate realization of the
benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Companys
future earnings, and other future events, the effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the deferred tax assets the Company established a valuation allowance equal to the deferred tax asset. The
change in the valuation allowance for the six months ended June 30, 2016 and 2015 was $541,390 and $501,144, respectively. The components of income tax expense (benefit) from continuing operations for the six months ended
June 30, 2016 and 2015 consist of the following:
For the Six Months Ended
June 30,
2016 2015
Current tax expense:
Federal $ - $ -
State - -
Current tax expense - -
Deferred tax expense (benefit):
Goodwill 255,554 255,554
Valuation Allowance (541,390) (501,144)
Net operating loss carryforward 285,836 245,590
Subtotal deferred tax expense/(benefit) - -
Income tax expense/(benefit) $ - $ - Deferred income tax expense/(benefit) results primarily from the reversal of temporary timing differences
between tax and financial statement income. A reconciliation of income tax expense as the federal statutory rate to income tax expense at the Companys
effective rate is as follows:
For the Six Months Ended June 30,
2016 2015
Computed tax at the expected statutory rate $ 453,267 $ 419,562
State and local income taxes, net of federal 87,936 81,399
Other non-deductible expenses 187 183
Valuation Allowance (541,390) (501,144)
Income tax expense/(benefit) $ - $ -
The temporary differences, tax credits and carryforwards gave rise to the following deferred tax asset at
June 30, 2016 and 2015:
December 31, December 31,
2015 2014
Current deferred tax assets (liabilities):
Allowance for doubtful accounts $ - $ -
Vacation accrual - -
Total current deferred tax assets (liabilities) - -
Long-term deferred tax assets (liabilities):
Goodwill - impaired 2,903,618 2,903,618
Goodwill tax amortization (4,734,404) (4,223,296)
Net operating loss carryforward 5,990,146 6,729,534
Valuation allowance (4,159,360) (5,409,856)
Total long-term deferred tax assets (liabilities) $ - $ -
Net term deferred tax assets (liabilities) $ - $ - |
