Income Taxes

12 Months Ended

Dec. 31, 2017

NOTE 12 – INCOME TAXES

2017 U.S. Tax Reform

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”) that significantly reforms the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, effective as of January 1, 2018; limitation of the tax deduction for interest expense; limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such tax losses may be carried forward indefinitely); modifying or repealing many business deductions and credits, including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as “orphan drugs”; and repeal of the federal Alternative Minimum Tax (“AMT”).

The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. In connection with the initial analysis of the impact of the TCJA, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. The remeasurement of the Company’s deferred tax assets and liabilities was offset by a change in the valuation allowance.

The Company is still in the process of analyzing the impact to the Company of the TCJA. Where the Company has been able to make reasonable estimates of the effects related to which its analysis is not yet complete, the Company has recorded provisional amounts. The ultimate impact to the Company’s consolidated financial statements of the TCJA may differ from the provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. The accounting is expected to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018.

Income Taxes

The Company maintains deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The deferred tax assets at December 31, 2017 and 2016 consist of net operating loss carry-forwards. The net deferred tax asset has been fully offset by a valuation allowance because of the uncertainty of the attainment of future taxable income. The items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes for the years ended December 31, 2017 and 2016 were as follows:

	Years Ended December 31,
	2017			2016
Income tax benefit at U.S. statutory rate of 34%		(34.00	)%		(34.00	)%
Income tax benefit - State		(3.63	)%		(3.63	)%
Non-deductible expenses		(26.67	)%		22.75	%
Change in tax rate estimate		16.27	%		-
Change in valuation allowance		48.03	%		14.88	%
Total provision for income tax		-			-

The Company’s approximate net deferred tax asset as of December 31, 2017, and 2016 was as follows:

	December 31, 2017			December 31, 2016
Deferred Tax Asset:
Provision for doubtful account	$	-		$	-
Net operating loss carry-forward		538,433			312,305
Valuation allowance		(538,433	)		(312,305	)
Net deferred tax asset	$	—		$	—

The net operating loss was approximately $2,124,415 at December 31, 2017. The Company provided a valuation allowance equal to the deferred income tax asset for the years ended December 31, 2017 and 2016 because it was not known whether future taxable income will be sufficient to utilize the loss carry-forward. The increase in the allowance was approximately $226,128 in fiscal year 2017 and $46,485 in fiscal year 2016.

Additionally, the future utilization of the net operating loss carry-forward to offset future taxable income may be subject to an annual limitation as a result of ownership changes that could occur in the future. If necessary, the deferred tax assets will be reduced by any carry-forward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation allowance.

The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s 2014, 2015, 2016 and 2017 Corporate Income Tax Returns are subject to Internal Revenue Service examination.

Helpful Alliance Co 10-K