Income Tax

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax

NOTE 21 – INCOME TAX

For the year ended December 31, 2016, the current income tax provision of $298,719 includes federal and state income taxes. The deferred income tax provision is $769,633 resulted from the reversal and the valuation allowance change in the deferred tax assets.

For the year ended December 31, 2015, the Company recognized a deferred income tax benefit of $1,797,977 related to the net operating losses carryforward.

The tax effect of temporary differences that give rise to deferred tax assets and deferred tax liabilities are as follows at December 31, 2016:

Deferred tax assets	Current			Long-Term
Reserves and deferred revenue	$	377,555		$	743,393
Stock options		-			472,254
Net operating loss		-			6,567,549
Total gross deferred tax assets		377,555			7,783,196
Deferred tax liabilities		(20,155	)		(108,033	)
Amortization of intangible assets and depreciation		-			(35,569	)
Net deferred tax assets	$	357,400		$	7,639,594

Components of net deferred tax assets, including a valuation allowance, are as follows at December 31:

	December 31,
	2016			2015
Deferred tax assets	$	7,996,994		$	2,440,391
Valuation allowance		(7,996,994	)		(1,845,851	)
Total deferred tax assets	$	-		$	594,540

The valuation allowance for deferred tax assets as of December 31, 2016 and 2015 was $7,996,994 and $1,845,851, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As the Company continues its integration process of Quest Marketing and BCS, the Company will continue to monitor the potential utilization of this asset. Should factors and evidence change to aid in this assessment, a potential adjustment to the valuation allowance in future periods may occur.

The reconciliation between statutory rate and effective rate is as follows at December 31, 2016:

	December 31,
	2016			2015
Federal statutory tax rate		34.0	%		(34.0	)%
State taxes		(0.27	)%		4.81	%
Non-deductible items		(17.80	)%		(1.53	)%
Change in valuation allowance		(46.33	)%		25.24	%
Return to provision adjustments		22.35	%		(5.65	)%
Effective tax rate		(8.05	)%		58.87	%

The Company reported no uncertain tax liability as of December 31, 2016 and expects no significant change to the uncertain tax liability over the next twelve months. The Company’s 2013, 2014 and 2015 federal and state income tax returns are open for examination by the applicable governmental authorities.

As of December 31, 2016, the Company had a net operating loss (NOL) carryforward of approximately $18,904,000. The NOL carryforward begins to expire in 2024.