PROVISION FOR INCOME TAXES

12 Months Ended

Dec. 31, 2015

4. PROVISION FOR INCOME TAXES

The components of the provision for income tax expense are as follows:

	Year Ended December 31,
	2015		2014
Current:
Federal	$	-	$	-
State		-		-
Foreign		-		-
		-		-
Deferred:
Federal		-		-
State		-		-
		-		-
Total provision (benefit) for income taxes	$	-	$	-

The Company is subject to United States federal and state income taxes at an approximate rate of 36.25%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

	Year Ended December 31,
	2015			2014
Federal tax benefit		(653,236	)		(137,563	)
State benefit, net of Federal		(43,295	)		(12,801	)
Permanent differences		171,517			(4,867	)
Prior year true up		(433	)		14,375
Change in valuation allowance		525,448			140,856
Total		-			-

Deferred tax assets consist of the following at:

	Year Ended December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforward	$	580,087		$	151,462
Allowance for bad debt		1,804			9,078
Accrued compensated absences		5,616			-
Depreciation		(5,434	)		(779	)
Deferred rent		-			1,761
Stock-based compensation		121,017			16,119
Total gross deferred tax assets		703,089			177,641
Less: valuation allowance		(703,089	)		(177,641	)
Net deferred tax assets	$	-		$	-

At December 31, 2015, the Company had federal and state net operating losses of approximately $1,565,000 which will begin to expire in 2033. On September 4, 2015, the Company completed a recapitalization, by which the non-surviving entity generated net operating losses through the completion of the recapitalization. The Company has not included these losses in the above deferred tax assets since it cannot conclude that it is more likely than not that they will not be limited or fully forfeited under Section 382 of the Internal Revenue Code.

The Company has historically generated losses and the future realizability of its loss carryforwards is uncertain, correspondingly, management believes that it is more likely than not that its deferred tax assets will not be realized. Due to this uncertainty, the Company has applied a 100% valuation against its deferred tax assets.

As of December 31, 2015 and 2014, the Company did not have any unrecognized tax benefits. The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. The Company currently has no federal or state tax examinations in progress nor has it had any federal or state tax examinations since its inception, however all periods since its inception remain open.

CSA HOLDINGS INC. 10-K