Annual report pursuant to Section 13 and 15(d)

NOTE 9. INCOME TAXES

NOTE 9. INCOME TAXES

12 Months Ended

Dec. 31, 2014

NOTE 9. INCOME TAXES

There was no provision for income taxes for 2014 and 2013 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 2011 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 for the purchase of Art Design, Inc. (the shell company) in the amount of $148,014.

	Fiscal Year			Fiscal Year
	Ended			Ended
	December 31, 2014			December 31, 2013

Income tax expense computed at statutory rates	$	(603,209	)	$	(304,646	)
Non-deductible items		468,253			24,823
Change in valuation allowance		134,956			279,823

Total	$	-		$	-

The components of the net deferred tax asset were as follows:

	December 31, 2013
	Gross Values			Tax Effect
Deferred tax assets
Book Impairment	$	-		$	-
Net operating loss carryforwards		3,417,844			1,196,245
Asset retirement obligation		-			-
Other		6,000			2,100
Total deferred tax assets		3,423,844			1,198,345

Deferred tax liabilities
O&G Properties		(1,280,525	)		(448,184	)
Other		-			-
Total deferred tax liabilities		(1,280,525	)		(448,184	)
Less: Valuation allowance		(2,143,319	)		(750,161	)
Net deferred tax assets (liabilities)	$	-		$	-

	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)	$	-		$	-

A valuation allowance has been established to offset deferred tax assets. The Company's accumulated net operating losses were approximately $4.2 million at December 31, 2014 and begin to expire if not utilized beginning in the year 2032.

The Company has determined that as a result of the acquisition of substantially all of the outstanding stock of Art Design, Inc., a change of control pursuant to Section 382 of the Internal Revenue Code of 1986 occurred. As a result, the Company’s ability to use any net operating losses attributable to Art Design, Inc. for federal income tax purposes has been forfeited

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details