INCOME TAXES

12 Months Ended

Dec. 31, 2014

The Company provides for income taxes under ASC Topic 740, Accounting for Income Taxes. Under ASC Topic 740, the liability method is used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

On February 13, 2013, the Company consummated a reverse merger, which resulted in a tax free reorganization resulting in the former VizConnect LLC becoming a wholly owned subsidiary of VizConnect, Inc. Prior to the reverse merger, VizConnect, LLC was taxed as a partnership under Subchapter K of the Internal Revenue Code. Furthermore, VizConnect, Inc. was essentially dormant and had no activity prior to the reverse merger. Since the LLC was taxed as a partnership prior to the reorganization and VizConnect, Inc. was inactive prior to the reorganization there would be no entity level tax and therefore ASC Topic 740 would not apply. From the time of the reverse merger forward, the Company is taxable as a C corporation and therefore is subject to an entity level tax and would be subject to ASC Topic 740.

For the years ended December 31, 2014 and 2013, the Company did not record a current or deferred income tax expense or benefit.

The components of loss before income taxes were as follows:

	Year ended December 31,
	2014			2013
Statutory rate applied to earnings before income taxes:	$	(1,135,305	)	$	(162,542	)
Increase (decrease) in income taxes resulting from:
State income taxes		(176,306	)		(25,242	)
Change in deferred tax asset valuation allowance		431,779			193,734
Non- deductible items		879,832			(5,950	)
Income Tax Expense	$	-		$	-

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets are comprised of the following:

	Year ended December 31,
	2014			2013
Deferred tax assets:
U.S. and state net operating loss carry forwards	$	625,513		$	184,818
Accruals and other temporary differences		-			8,916
Total deferred tax assets		625,513			193,734
Less valuation allowance	$	(625,513	)		(193,734	)
Net deferred tax asset	$	0		$	0

As of December 31, 2014 and 2013, the Company had U.S. federal net operating loss carry forwards of approximately $1,592,400 and $470,000, respectively, which may be available to offset future income tax liabilities and expire in 2034. As of December 31, 2014 and 2013, the Company also had U.S. state net operating loss carry forward of approximately $-0- and $-0-, respectively, which may be available to offset future income tax liabilities and expire in 2034. The change in the valuation allowance for the years ended December 31, 2014 and 2013 was $431,779 and $193,734, respectively.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carry forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.

The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014 and 2013, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations and comprehensive loss.

The Company files income tax returns in the United States, Canada, and various state jurisdictions. The federal, Canadian, and state income tax returns are generally subject to tax examinations, and an adjustment may be made for those years not closed by the statute of limitations, which is generally three years from the date the return is filed. To the extent the Company has tax attribute carry forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

- 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

VIZCONNECT, INC. 10-K