Income Taxes

12 Months Ended

Dec. 31, 2018

8. Income Taxes

No provision for federal income taxes has been recognized for the twelve months ended December 31, 2018 and 2017, as the Company has a net operating loss carry forward for income tax purposes available in each period. Additionally, it is uncertain if the Company will have taxable income in the future, so a valuation allowance has been established for the full value of net deferred tax assets. The deferred tax asset consists of net operating loss carry forwards and a cumulative deferral of tax deductions under the Cash Basis of Accounting, which the Company utilizes for tax purposes. The Company has a deferred tax liability related to Intangible assets amortizable for GAAP purposes which there is no tax basis for.

At December 31, 2018 and 2017, the Company has net operating loss carry forwards on a pretax basis of $10,835,956 and $4,286,559 respectively, resulting in future tax assets of $2,275,551 and $900,177, respectively for federal income tax purposes. This net operating loss carry forward may be carried forward in varying amounts until 2037 and may be limited in their use due to significant changes in the Company’s ownership. Net Operating Losses generated after December 31, 2018 have no expiration date. The Company also has a cumulative deferral of tax deductions under the Cash Basis of Accounting on a pretax basis of $3,006,995 and $1,016,281, respectively, resulting in future tax assets of $631,469 and $213,419, respectively, for federal income tax purposes. This cumulative deferral of tax deductions varies each year with the Company’s operations and will be deductible in future periods.

The Company revalued it’s Deferred Tax Assets and the corresponding valuation allowance for the change in the corporate tax rate beginning in January, 2018. As of December 31, 2018, the Company reduced the Deferred Tax Asset by $685,810 and the corresponding valuation allowance by the same amount for the decrease of the corporate tax rate from 34% to 21%.

	12/31/18			12/31/17

Net Operating Loss Carryforwards		2,275,551			910,671
Accrual to Cash Accounting Differences		246,868			197,175
Intangibles		(36,233	)
Less: Valuation Allowance		(2,491,783	)		(1,107,847	)

Net Deferred Tax Asset		(5,597	)		-

Current Federal & State Tax Provision		-
Deferred Federal & State Tax Provision		503

Total Tax Provision		503

ZENERGY BRANDS, INC. 10-K