Annual report pursuant to Section 13 and 15(d)

DEFERRED INCOME TAXES

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DEFERRED INCOME TAXES
 12 Months Ended
Sep. 30, 2022
Deferred Income Taxes [Abstract]  
DEFERRED INCOME TAXES

NOTE 8 - DEFERRED INCOME TAXES

 

The Company calculates its deferred tax assets based upon its consolidated net operating loss (NOL) carryovers available to offset future taxable income, net of other tax credit(s) or tax deferred liabilities, if any. No deferred tax assets for the years ended September 30, 2022 and 2021 have been recorded since any available deferred tax assets are fully offset by increases in its valuation allowances. The Company increased its valuation allowance based on its history of consolidated net losses. At September 30, 2022, the Company has an adjusted net operating loss carryforward of approximately $13,782,000 that expire through 2039. Should a cumulative change in the ownership of more than 50% occur within a three-year period, there could be an annual limitation on the use of the net operating loss carryforwards.

 

Deferred income taxes reflect the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes plus any available consolidated, net deferred tax credits. Significant components of the Company's net deferred income tax assets at September 30, 2022 and 2021, respectively are as follows:

 

 

 

 2022

 

2021

Depreciation

 

$

 2,842

 

$

   2,746

Allowance for doubtful account

 

 

15,880

             

 

     12,332

Net operating loss carryforward

 

 

  3,493,201

 

 

  3,601,402

Net deferred income tax asset

 

 

3511,923

 

 

  3,616,480

Less: valuation allowance

 

  

 (3,511,923)

 

 

 (3,616,480)

Total deferred income tax assets

 

$

-

 

$

-

 

A reconciliation of the Federal and respective State income tax rate as a percentage of income before taxes is as follows:

 

      2022

 

    2021

 

 

 

 

 

 

Federal statutory taxes

$

79,558

 

$

71,660

State income taxes, net of federal benefit

 

22,049

 

 

19,860

Change in tax estimates

 

850

 

 

(5,901)

Less: Valuation allowance, non-deductible items

 

2,100

 

 

1,434

Change in valuation allowance

 

(104,557)

 

 

(87,053)

 

$

-0-

 

$

-0-

 

               

 

 

      2022

 

 

    2021

 

 

 

 

 

 

 

 

Federal statutory Income tax rate

 

 

21.00%

 

 

 

21.00%

State taxes, net of federal benefit

 

 

4.35%

 

 

 

4.35%

Effective rate of deferred tax asset

 

 

25.35%

 

 

 

25.35%

Less: Valuation allowance

 

 

(25.35%)

 

 

 

(25.35%)

Effective income tax rate

 

 

0.00%

 

 

 

0.00%

 

Management has determined that it is more likely than not that the Company will not use the NOL carryforward and has a 100% valuation allowance against the deferred asset. The reserve is based on historical experience of the Company's operations as it has not recognized net income in its current incarnation and there is no indication of any events or conditions that would show that trend will not continue due to the Company's current expectation of expense requirements.