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INCOME TAXES

12 Months Ended

Dec. 31, 2014

NOTE 9 – INCOME TAXES

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes from continuing operations were as follows:

	December 31,			December 31,
	2014			2013

Statutory federal income tax rate		34	%		34	%
State taxes, net of federal benefit		1	%		1	%
Change in valuation allowance		-35	%		-35	%
		0	%		0	%

Significant components of deferred income tax assets and liabilities are as follows:

	December 31,			December 31,
	2014			2013

Net operating loss carryforwards	$	811,455		$	522,000
Depreciation and amortization		3,018
Less: Valuation allowance		(814,473	)		(522,000	)
Deferred tax assets, net	$	-		$	-

Internal Revenue Code Section 382 and similar California rules place a limitation on the amount of taxable income that can be offset by net operating loss carryforwards (“NOL”) after a change in control (generally greater than a 50% change in ownership). Transactions such as planned future sales of our common stock may be included in determining such a change in control. These factors give rise to uncertainty as to whether the net deferred tax assets are realizable. We have $2,386,633 in NOL at December 31, 2014 that will begin to expire in 2029 for federal and state purposes and could be limited for use under IRC Section 382. We have recorded a valuation allowance against the entire net deferred tax asset balance due because we believe there exists a substantial doubt that we will be able to realize the benefits due to our lack of a history of earnings and due to possible limitations under IRC Section 382.

We file income tax returns in the U.S. with varying statutes of limitations. Our policy is to recognize interest expense and penalties related to income tax matters as a component of our provision for income taxes. There were no accrued interest and penalties associated with uncertain tax positions as of December 31, 2014 and 2013. We have no unrecognized tax benefits and no interest or penalties included in the financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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