Note 8 — Income Tax

The Company’s deferred tax assets are as follows at December 31, 2015:

	12/31/2015			12/31/2014
Deferred tax asset
Net operating loss carryforward	$	105,804			529
Unrealized loss on securities		-			-
Business combination expenses		-			-
Total deferred tax assets		105,804			529
Valuation Allowance		(105,804	)		(529	)
Deferred tax asset, net of allowance	$	-			-

The income tax provision (benefit) consists of the following at December 31, 2015:

	Year Ended 12/31/15			Year Ended 12/31/14
Federal
Current	$	-		$	-
Deferred		(89,484	)		(450	)
State and Local
Current		-			-
Deferred		(15,791	)		(79	)
Change in valuation allowance		105,275			529
Income tax provision (benefit)	$	-		$	-

The Company has a net operating loss (“NOL”) of approximately $264,510, These NOLs expire beginning in 2036. The ultimate realization of the net operating loss is dependent upon future taxable income, if any, of the Company and may be limited in any one period by applicable tax rules. Although management believes that the Company will have sufficient future taxable income to absorb the net loss carryovers before the expiration of the carryover period, there may be circumstances beyond the Company’s control that limit such utilization. Accordingly, management has determined that full valuation allowances of the deferred tax asset are appropriate as of December 31, 2015.

Internal Revenue Code Section 382 imposes limitations on the use of NOL carryovers when the stock ownership of one or more 5% shareholders (shareholders owning more than 5% of the Company’s outstanding capital stock) has increased on a cumulative basis more than 50 percentage points within a period of two years. Management cannot control the ownership changes occurring as a result of public trading of the Company’s Common Stock. Accordingly, there is a risk of an ownership change beyond the control of the Company that could trigger a limitation of the use of the loss carryover.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions and is subject to examination by the various taxing authorities. The Company considers New York to be a significant state tax jurisdiction. The Company's federal, state and local income taxes for the years beginning in 2014 remain subject to examination.

The Company established a valuation allowance of $105,804 as of December 31, 2015, which fully offset the related deferred tax assets of $105,804. The deferred tax asset reflected in the tables above resulted from applying an effective combined federal and state tax rate of 40% to the net operating losses from fiscal 2015. Effective tax rates differ from statutory rates.

A reconciliation of the statutory tax rate to the Company’s effective tax rates as of December 31, 2015 is as follows:

	Year Ended 12/31/15			Year Ended 12/31/14
Statutory federal income tax rate		-34.0	%		-34.0	%
State taxes, net of federal tax benefit		-6.0	%		-6.0	%
Change in valuation allowance		40.0	%		40.0	%
Income tax provision (benefit)		0.0	%		0.0	%