NOTE 4 - INCOME TAXES

In accordance with the Tax Cuts and Jobs Act that was enacted on December 22, 2017 (“U.S. Tax Reform Act”), we have recorded a credit for income taxes of $220,954. The impact of the U.S. Tax Reform Act is primarily from revaluing our U.S. deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. For U.S. federal purposes the corporate statutory income tax rate was reduced from 35% to 21%, effective for our 2018 tax year. The provisional impact of the U.S. Tax Reform Act is our current best estimate based on the preliminary review of the new law and is subject to revision based on our existing accounting for income taxes policy as further information is gathered and interpretation and analysis of the tax legislation evolves. The Securities and Exchange Commission has issued rules allowing for a measurement period of up to one year after the enactment date of the U.S Tax Reform Act to finalize the recording of the related tax impacts. Any future changes to our provisional estimated impact of the U.S Tax Reform Act will be included as an adjustment to the provision for income taxes.

The Company’s income tax expense (benefit) consisted of the following:

	2017			2016
Current:
Federal	$	(2,746	)	$	127,768
State		8,035			18,482
Deferred:
Federal		(264,707	)		20,444
State		16,637			(17,495	)

	$	(242,781	)	$	149,199

The actual tax expense (benefit) for 2017 and 2016 differs from the "expected" tax expense for those years (computed by applying the applicable United States federal corporate tax rate to income before income taxes) as follows:

	2017			2016

Computed "expected" expense (benefit)	$	(78,408	)	$	68,558
Permanent differences		42,570			55,998
State and local income tax expense		(7,749	)		11,738
True-up of current taxes		1,025			9,295
True-up of deferred taxes		20,735			3,610
Change in federal statutory rate		(220,954	)		--

Income tax expense (benefit)	$	(242,781	)	$	149,199

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets/(liabilities) at December 31, 2017 and 2016 are as follows:

	2017			2016
Deferred tax assets:
Stock options	$	12,406		$	39,837
Accrued vacation		65,317			76,669
Bad debt allowance		8,309			11,878
Deferred revenue		4,674			6,682
Deferred rent		4,362			4,978
Other		19,945			24,402

Total deferred tax assets		115,013			164,446

Deferred tax liabilities:
Goodwill		(541,310	)		(773,848	)
Fixed assets		(88,036	)		(153,001	)

Total deferred tax liabilities		(629,346	)		(926,849	)

Net deferred tax liabilities	$	(514,333	)	$	(762,403	)