Income tax

12 Months Ended

Dec. 31, 2014

Income Taxes:

Income Tax

Note 13 - Income tax

The Company and its subsidiary, WCI, are taxed as C-Corporations for federal income tax purposes.  MCB is a LLC which is a disregarded entity for income tax purposes, therefore, MCB’s taxable income or loss is reported by its shareholders.

The provision (benefit) for income taxes for the years ended December 31, 2014 and 2013 consist of the following:

	2014	2013
Current:
Federal	$          35,020	$                    -
State	800	800
	35,820	800
Deferred:
Federal	359,106	68,700
State	157,851	17,800
Change in valuation	(516,957)	(86,500)
Total provision (benefit)	$          35,820	$               800

The Company has net deferred tax assets resulting from a timing difference in recognition of deferred revenue and from net operating loss carryforwards. 

At December 31, 2014, the Company had approximately $3,600,000 of federal net operating loss carryforwards that begin expiring in 2032, $2,400,000 of California net operating loss carryforwards that begin expiring in 2022, $1,700,000 of Arizona net operating loss carryforwards that begin expiring in 2027 and $35,000 of Florida net operating loss carryforwards that begin expiring in 2034. 

The income tax provision (benefit) differs from the amount computed by applying the US federal income tax rate of 34% to net income (loss) before income taxes for the years ended December 31, 2014 and 2013 as a result of the following:

	2014	2013
Net income (loss) before taxes	$      (465,126)	$      (258,784)
US federal income tax rate	34%	34%
Computed expected tax provision (benefit)	(158,143)	(87,987)
Permanent differences and other	(167,038)	1,487
WCI net operating losses at January 1, 2014 included in change in valuation allowance	(616,994)	-
Change in valuation	976,100	86,500
Federal income tax provision	$          33,925	$                   -

The significant components of deferred income tax assets as of December 31, 2014 and 2013 after applying enacted corporate income tax rates are as follows:

	2014	2013
Net Operating Losses carried forward	$  1,639,800	$     241,300
Deferred revenue  and other	68,200	267,600
Valuation allowance	(1,708,000)	(508,900)
	$                 -	$                 -