Annual report pursuant to Section 13 and 15(d)

Deferred Tax Assets and Income Tax Provision

v3.19.3
Deferred Tax Assets and Income Tax Provision
12 Months Ended
Aug. 31, 2019
Deferred Tax Assets and Income Tax Provision  
Note 9- Deferred Tax Assets and Income Tax Provision

Deferred Tax Assets

 

At August 31, 2019, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $640,523 that may be offset against future taxable income through 2039. No tax benefit has been recorded with respect to these net operating loss carry-forwards in the accompanying financial statements as the management of the Company believes that the realization of the Company’s net deferred tax assets of approximately $134,500 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full 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 realization. The valuation allowance decreased by $4,500 and $77,200 for the years ended August 31, 2019 and 2018, respectively.

 

Components of deferred tax assets are as follows:

 

 

August 31,

2019

 

August 31,

2018

 

Net deferred tax assets – Non-current:

 

Expected income tax benefit from NOL carry-forwards

 

$

134,500

 

$

139,000

 

Less valuation allowance

 

(134,500

)

 

(139,000

)

 

Deferred tax assets, net of valuation allowance

 

$

-

 

$

-

 

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 loss before income taxes is as follows:

 

 

For the year ended August 31,

2019

 

For the year ended August 31,

2018

 

Blended federal statutory income tax rate

 

21.00

%

 

25.33

%

 

Increase (reduction) in income tax provision resulting from:

 

Net operating loss (“NOL”) carry-forwards

 

(21.00

)

 

(25.33

)

 

Effective income tax rate

 

0.0

%

 

0.0

%

 

The Company’s income tax filings are subject to audit by various taxing authorities. The Company’s open audit periods are August 31, 2018 to the current tax year.