Transition report pursuant to Rule 13a-10 or 15d-10

Income Taxes

v3.19.1
Income Taxes
9 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 5 – INCOME TAXES

 

On December 22, 2017, the Tax Reform Act was signed into law which significantly changed U.S. tax law by, among other things, lowering the corporate income tax rate from 35% to 21%, effective January 1, 2018; allowing for the acceleration of expensing for certain business assets; requiring companies to pay a one-time transition tax on certain un-remitted earnings of foreign subsidiaries; and eliminating U.S. federal income tax on dividends from foreign subsidiaries. The Company has no tax provision for any period presented due to its history of operating losses. As of December 31, 2018, the Company had deferred tax assets of approximately $498,000, resulting from certain temporary differences and net operating loss (“NOL”) carry-forwards of approximately $2,370,000, which are available to offset future taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as management has determined that their realization is not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. Due to the change in control of the Company (see Note 1), there are significant limitations on the use of the NOLs in future periods.

 

The income tax provision consists of the following for the nine months ended December 31, 2018 and the year ended March 31, 2018:

 

      December 31, 2018       March 31, 2018  
Federal                
Current   $ -     $ -  
Deferred     -       -  
                 
State                
Current     -       -  
Deferred     -       -  
                 
Income tax provision   $ -     $ -  

 

Components of deferred tax assets as of December 31, 2018 and March 31, 2018 are as follows:

 

    December 31, 2018     March 31, 2018  
Net deferred tax assets – non-current:                
                 
NOL carry-forwards   $ 378,000     $ 162,000  
Share-based compensation     120,000       -  
Less valuation allowance     (498,000 )     (162,000 )
                 
Deferred tax assets, net of valuation allowance   $ -     $ -  

 

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

 

   

For the nine

months ended

December 31, 2018

   

For the year
ended

March 31, 2018

 
             
Federal statutory income tax rate     21.0 %     30.0 %
                 
Change in valuation allowance     (21.0 )     (30.0 )
                 
Effective income tax rate     0.0 %     0.0 %

 

The Company’s operations are based in California and it is subject to Federal and California state income tax. Tax years after 2014 are open to examination by United States and state tax authorities.

 

The Company adopted accounting rules which address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under these rules, 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 are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. These accounting rules also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2018 and March 31, 2018, no liability for unrecognized tax benefits was required to be recorded.