INCOME TAXES |
NOTE 11. INCOME TAXES
There was no provision
for income taxes for 2015 and 2014 due to a net operating losses and doubt as to the entitys ability to continue as a going
concern resulting in a 100% valuation allowance. Years from 2012 forward are open to IRS examination.
The provision for income
taxes differs from the amount computed by applying the federal statutory income tax rate (35%) on operations due primarily to
permanent differences attributable to organizational expenses.
|
|
Fiscal Year Ended December 31, 2015 |
|
|
Fiscal Year Ended December 31, 2014 |
|
|
|
|
|
|
|
|
|
|
Income tax expense computed at statutory rates |
|
$ |
(649,815 |
) |
|
$ |
(603,209 |
) |
Non-deductible items |
|
|
66,313 |
|
|
|
468,253 |
|
Change in valuation allowance |
|
|
583,502 |
|
|
|
134,956 |
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
The components of the net
deferred tax asset were as follows:
|
|
December 31, 2014 |
|
|
|
Gross Values
|
|
|
|
Tax Effect |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Book Impairment |
|
$ |
|
|
|
$ |
|
|
Net operating loss carryforwards |
|
|
4,235,227 |
|
|
|
1,482,329 |
|
Asset retirement obligation |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
4,235,227 |
|
|
|
1,482,329 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
O&G Properties |
|
|
(1,631,976 |
) |
|
|
(571,192 |
) |
Other |
|
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
|
(1,631,976 |
) |
|
|
(571,192 |
) |
Less: Valuation allowance |
|
|
(2,603,251 |
) |
|
|
(911,137 |
) |
Net deferred tax assets (liabilities) |
|
$ |
|
|
|
$ |
|
|
|
|
December 31, 2015 |
|
|
|
|
Gross Values |
|
|
|
Tax Effect |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Book Impairment |
|
$ |
668,073 |
|
|
$ |
233,826 |
|
Net operating loss carryforwards |
|
|
5,911,319 |
|
|
|
1,742,830 |
|
Asset retirement obligation |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total deferred tax assets |
|
|
6,579,392 |
|
|
|
1,976,656 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
O&G Properties |
|
|
(2,211,892 |
) |
|
|
(774,162 |
) |
Other |
|
|
|
|
|
|
|
|
Total deferred tax liabilities |
|
|
(2,211,892 |
) |
|
|
(774,162 |
) |
Less: Valuation allowance |
|
|
(4,367,500 |
) |
|
|
(1,202,494 |
) |
Net deferred tax assets (liabilities) |
|
$ |
|
|
|
$ |
|
|
A
valuation allowance has been established to offset deferred tax assets. The Companys accumulated net operating losses were
approximately $5.6 million at December 31, 2015 and begin to expire if not utilized beginning in the year 2032.
|