INCOME TAX

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE M – INCOME TAX

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); modifying or repealing many business deductions and credits, including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”; and repeal of the federal Alternative Minimum Tax (“AMT”).

The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. In connection with the initial analysis of the impact of the TCJA, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company's deferred tax assets and liabilities was offset by a change in the valuation allowance.

The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Company’s consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018.

At December 31, 2017 and 2016 we had deferred tax assets principally arising from the net operating loss carry forwards for income tax purposes multiplied by the Federal statutory tax rate of 34%. As management of the Company cannot determine that it is more likely than not that we will realize the benefit of the deferred tax assets, a valuation allowance equal to the deferred tax asset has been established at December 31, 2017 and 2016.

The significant components of the deferred tax asset at December 31, 2017 and 2016 were as follows:

	For the Years Ended December 31
	2017			2016
Statutory rate applied to income (loss) before income taxes	$	779,193		$	(203,601	)
Increase (decrease) in income taxes results from:
Non-deductible expense		753			—
Change in tax rate estimates		1,321,015			—
Change in valuation allowance		(2,100,961	)		203,601
Income tax expense (benefit)	$	—		$	—

The difference between income tax expense computed by applying the federal statutory corporate tax rate and provision for actual income tax is as follows:

	For the Years Ended December 31
	2017			2016
Income tax benefit at U.S. statutory rate of 34%		34.00	%		-34.00	%
Income tax benefit - State		3.63	%		-3.63	%
Non-deductible expense		0.03	%		0.00	%
Change in tax rate estimates		63.80	%		0.00	%
Change in valuation allowance		-101.46	%		37.63	%
Income tax expense (benefit)		—			—

Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The effects of temporary differences that gave rise to deferred tax assets are as follows:

	For the Years Ended December 31
Deferred tax assets:	2017			2016
Operating loss carryforwards	$	2,687,998		$	4,788,959
Gross deferred tax assets		2,687,998			4,788,959
Valuation allowance		(2,687,998	)		(4,788,959	)
Net deferred income tax asset	$	—		$	—

Decrease in the deferred income tax asset is attributable to the change in tax rate estimates and the estimated deferred income tax benefit of approximately $1,098,000 arising from operating loss carrybacks. The change in valuation allowance for the years ended December 31, 2017 and 2016 was a (decrease) increase of $(2,100,961) and $203,601, respectively.

The Company has made a 100% valuation allowance of the deferred income tax asset at December 31, 2017, as it is not expected that the deferred tax assets will be realized. The Company has a net operating loss carryforward of $10,605,634 available to offset future taxable income.

The Company’s federal income tax returns for 2015, 2016 and 2017 remain subject to examination by the Internal Revenue Services and state tax authorities.