NOTE 10 – INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates on the date of the enactment.

Net deferred tax assets and liabilities consist of the following components as of December 31, 2013 and 2014:

	2013			2014

Deferred Tax Assets
NOL Carryforward		2,778,200		$	3,841,000
Contribution Carryforward		2,900			2,900
Cumulative Impairment Losses		223,600			223,600
Capital Loss Carryover		-			49,600
Deferred Tax Liabilities
Depreciation		(4,700	)		(2,300	)
Valuation Allowance		(3,000,000	)		(4,114,800	)
Net Deferred Tax Asset	$	-		$	-

The income tax expense differs from the amount of income tax determined by applying the U.S. federal and state income tax rates to pretax income from continuing operations for the years ended December 31, 2013 and 2014 due to the following:

	2013			2014

Book Income	$	(462,400	)	$	(194,500	)

Minimum State Franchise Taxes		780			-
Change in Contingent Liabilities		(156,000	)		-
Depreciation		1,500			(1,100	)
Meals & Entertainment		2,200			2,500
Express Tax Gain on Disposal		2,600			-
NOL Carryforward		47,600			-
Impairment Loss		112,100			-
Valuation Allowance		358,966			193,100
	$	(92,654	)	$	-

As of December 31, 2014, the Company had Net Operating Loss (NOL) carryforwards of approximately $9,848,800 that may be offset against future taxable income from the year 2015 through 2034.

Due to the change in ownership provisions of the Tax Reform Act of 1986, Net Operating Loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

ASC No. 740 requires an asset and liability approach for accounting for income taxes and prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC No. 740 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

The Company estimates that the unrecognized tax benefit will not change significantly within the next twelve months. As of December 31, 2012, the Company had prepared an amendment to its 2009 federal tax return which it had not filed. As a result of this amendment the Company had accrued a liability of $92,654 which included $85,935 in income tax due based on the amendment and $6,719 in interest and penalties related to this additional tax. The following table summarizes the tax years open to scrutiny by taxing authorities for each major jurisdiction:

Jurisdiction	Open Tax Years
Federal	2010 - 2013
Utah State	2010 - 2013

On September 16, 2013, the Company recognized a $92,654 income tax gain to remove the liability when the 2009 federal tax return was no longer open to scrutiny by taxing authorities.

As the Company has significant net operating loss carry forwards, even if certain of the Company's tax positions were disallowed, it is not foreseen that the Company would have to pay any taxes in the near future. Consequently, the Company does not calculate the impact of interest or penalties on amounts that might be disallowed.