Provision for Income Taxes

6 Months Ended

Feb. 28, 2019

NOTE 9 - PROVISION FOR INCOME TAXES

The Company accounts for income taxes under FASB Accounting Standard Codification ASC 740 “Income Taxes”. ASC 740 requires use of the liability method. ASC 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

As of February 28, 2019 and August 31, 2018, the Company had net operating loss carry forwards of approximately $3,697,000 and $2,883,000, respectively, as follows:

Tax Jurisdiction	February 28, 2019		August 31, 2018
United States	$	1,418,000	$	1,296,000
Hong Kong		1,356,000		855,000
China (UBI Shenzhen)		963,000		732,000
Total	$	3,737,000	$	2,883,000

United States net operating losses prior to 2018 may be carried forward to reduce future years taxable income for 20 years; United States net operating losses after 2017 may be carried forward indefinitely. Hong Kong net operating losses may be carried forward indefinitely. China net operating losses may be carried forward for 5 years. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements as their realization has not been determined likely to occur. Also, United States tax laws limit the amount at loss available to be offset against future taxable income when a substantial change in ownership occurs.

At February 28, 2019 and August 31, 2018, deferred tax assets consisted of:

	February 28, 2019			August 31, 2018
Net operating loss carry forwards	$	755,910		$	587,617
Valuation allowance		(755,910	)		(587,617	)
Deferred tax assets - net	$	-		$	-

As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017, the United States corporate income tax rate was reduced from 35% to 21% effective January 1, 2018. Accordingly, we reduced our deferred income tax asset relating to our United States net operating loss carryforward (and the valuation allowance thereon) by approximately $166,000 on December 31, 2017.

All tax years remain subject to examination by the respective tax authorities.

UBI Blockchain Internet LTD-DE 10-Q