INCOME TAXES

3 Months Ended

Mar. 31, 2017

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 5 - INCOME TAXES

The Company accounts for income taxes in accordance with FASB ASC Topic 740, Accounting for Income Taxes which requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards. At March 31, 2017 and 2016, the total of all deferred tax assets was $3,876,789 and $4,459,356, respectively, and the total of the deferred tax assets related to goodwill was $2,214,117 and $1,703,009, respectively.  The amount of and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined.  Because of the uncertainty surrounding the realization of the deferred tax assets the Company established a valuation allowance equal to the deferred tax asset.  The change in the valuation allowance for the three months ended March 31, 2017 and 2016 was $(127,777) and $241,394, respectively.

The components of income tax expense (benefit) from continuing operations for the three months ended March 31, 2017 and 2016 consist of the following:

		For the Three Months Ended
		March 31,
		2017		2016
Current tax expense:
Federal	$	-	$	-
State		-		-
Current tax expense		-		-
Deferred tax expense (benefit):
Goodwill		127,777		127,777
Valuation Allowance		(127,777)		(241,394)
Net operating loss carryforward		(307,256)		113,617
Subtotal deferred tax expense/(benefit)		(307,256)		-
Income tax expense/(benefit)	$	(307,256)	$	-

Deferred income tax expense/(benefit) results primarily from the reversal of temporary timing differences between tax and financial statement income.

A reconciliation of income tax expense as the federal statutory rate to income tax expense at the Company’s effective rate is as follows:

		For the Three Months Ended March 31,
		2017		2016
Computed tax at the expected statutory rate	$	(257,854)	$	202,060
State and local income taxes, net of federal		(49,906)		39,208
Other non-deductible expenses		504		126
Valuation Allowance		-		(241,394)
Income tax expense/(benefit)	$	(307,256)	$	-

The temporary differences, tax credits and carryforwards gave rise to the following deferred tax asset at March 31, 2017 and 2016:

		March 31,		March 31,
		2017		2016
Net deferred tax assets (liabilities):
Goodwill - impaired		2,903,618		2,903,618
Goodwill – tax amortization		(5,117,735)		(4,606,627)
Net operating loss carryforward		6,090,906		6,162,365
Valuation allowance		(3,569,533)		(4,459,356)
Net term deferred tax assets (liabilities)	$	307,256	$	-