Note 2 - Summary of Significant Accounting Policies: Provision For Taxes (Policies)

12 Months Ended

May 31, 2015

Provision for Taxes

We account for income taxes in accordance with accounting guidance now codified as FASB ASC Topic 740, “Income Taxes,” which requires that we recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

Accounting guidance now codified as FASB ASC Topic 740-20, “Income Taxes – Intra-period Tax Allocation,” clarifies the accounting for uncertainties in income taxes recognized in accordance with FASB ASC Topic 740-20 by prescribing guidance for the recognition, de-recognition and measurement in financial statements of income tax positions taken in previously filed tax returns or tax positions expected to be taken in tax returns, including a decision whether to file or not to file in a particular jurisdiction. FASB ASC Topic 740-20 requires that any liability created for unrecognized tax benefits is disclosed. The application of FASB ASC Topic 740-20 may also affect the tax bases of assets and liabilities and therefore may change or create deferred tax liabilities or assets. We would recognize interest and penalties related to unrecognized tax benefits in income tax expense.

At May 31, 2015, the Company had net deferred tax asset calculated at an expected rate of 34% of approximately $4,724,000 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at May 31, 2015. The significant components of the deferred tax asset at May 31, 2015 and May 31, 2014 were as follows:

		May 31, 2015		May 31, 2014
Net operating loss carryforward	$	13,893,492	$	13,631,839
Deferred tax asset - NOL	$	4,723,787	$	4,634,866
Deferred tax asset valuation allowance	$	(4,723,787)	$	(4,634,866)
Net deferred tax asset	$	0	$	0

At May 31, 2015, the Company had net operating loss carryforwards of approximately $13,893,000 which expire in the years 2020 through 2033. The change in the allowance account from May 31, 2014 to May 31, 2015 was $88,921.

The components of current income tax expense as of May 31, 2015 and 2014 respectively are as follows:

	As of May 31,
		2015		2014
Current federal tax expense	$	-	$	-
Current state tax expense	$	-	$	-
Change in NOL benefits	$	88,921	$	188,704
Change in valuation allowance	$	(88,921)	$	(188,704)
Income tax expense	$	0	$	0

For the period ended May 31, 2015, other than a reserve of $150,000 for potential federal tax penalties associated with late filing of foreign subsidiary disclosures, the Company did not record any liabilities for uncertain tax positions.

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

Occidental Development Group, Inc. 10-K