Income Tax Disclosure [Text Block] |
NOTE 11. INCOME TAXES
There was no provision for income taxes for 2016 and 2015 due to a net operating losses and doubt as to the entity’s 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.
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Fiscal Year
Ended
December 31,
2016
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|
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Fiscal Year
Ended
December 31,
2015
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|
|
|
|
|
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|
Income tax expense computed at statutory rates
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$
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(656,523
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)
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|
$
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(649,815
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)
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Non-deductible items
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|
219,438
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|
|
|
66,313
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|
Change in valuation allowance
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|
|
437,085
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|
|
|
583,502
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|
|
|
|
|
|
|
|
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Total
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|
$
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—
|
|
|
$
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—
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|
The components of the net deferred tax asset were as follows:
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December 31, 2015
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Gross Values
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Tax Effect
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Deferred tax assets
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|
|
|
|
|
|
|
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Book impairment
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$
|
668,073
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$
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|
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$
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233,826
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Net operating loss carryforwards
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5,911,319
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|
|
|
|
|
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2,068,962
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Asset retirement obligation
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|
|
—
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|
|
|
|
|
|
|
—
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Other
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|
|
—
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|
|
|
|
|
|
|
—
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Total deferred tax assets
|
|
|
6,579,392
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|
|
|
|
|
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|
2,302,788
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|
|
|
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|
|
|
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|
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Deferred tax liabilities
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|
|
|
|
|
|
|
|
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|
O&G Properties
|
|
|
(2,211,892
|
)
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|
|
|
|
|
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(774,162
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)
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Other
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|
|
—
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|
|
|
|
|
|
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—
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Total deferred tax liabilities
|
|
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(2,211,892
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)
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|
|
|
|
|
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(774,162
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)
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Less: Valuation allowance
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|
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(4,367,500
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)
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|
|
|
|
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(1,528,626
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)
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Net deferred tax assets (liabilities)
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|
$
|
—
|
|
|
$
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|
|
|
$
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—
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|
|
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December 31, 2016
|
|
|
|
Gross Values
|
|
|
Tax Effect
|
|
Deferred tax assets
|
|
|
|
|
$ |
|
|
Book Impairment
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|
$
|
668,073
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$
|
233,825
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Net operating loss carryforwards
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|
7,120,879
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|
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2,492,308
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Asset retirement obligation
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|
|
—
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|
|
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—
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Other
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|
|
—
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|
|
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—
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Total deferred tax assets
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|
|
7,788,952
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|
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2,726,133
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|
|
|
|
|
|
|
|
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Deferred tax liabilities
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|
|
|
|
|
|
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|
O&G Properties
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|
|
(6,496,717
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)
|
|
|
(2,273,851
|
)
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Other
|
|
|
—
|
|
|
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—
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Total deferred tax liabilities
|
|
|
(6,496,717
|
)
|
|
|
(2,273,851
|
)
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Less: Valuation allowance
|
|
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(1,292,235
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)
|
|
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(452,282
|
)
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Net deferred tax assets (liabilities)
|
|
$
|
—
|
|
|
$
|
—
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A valuation allowance has been established to offset deferred tax assets. The Company’s accumulated net operating losses were approximately $7.8 million at December 31, 2016 and begin to expire if not utilized beginning in the year 2032.
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