INCOME TAXES

12 Months Ended

Mar. 31, 2019

NOTE 5 – INCOME TAXES

On December 22, 2017, H.R. 1, originally known as the Tax Cuts and Jobs Act (“the Tax Reform Act”) was enacted. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, implementing a territorial tax system and removing the expiration of net operating losses. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The Company did not record any tax expense or benefit due to a remeasurement of deferred tax assets and liabilities.

At March 31, 2019 and 2018, the Company had net deferred tax assets of approximately $1,427,000 and $1,393,000 principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at March 31, 2019 and 2018. At March 31, 2019, the Company has net operating loss carry forwards totaling approximately $6,792,000 of which $6,632,000 is from the years ended March 31, 2000 through March 31, 2018 and these will begin to expire in the year 2020. Under the Tax Reform Act the loss from 2018 will not expire.

Income tax provision (benefit) for the years ended March 31, 2019 and 2018 is summarized below:

	2019			2018
Current:
Federal	$	—		$	—
State		—			—
Total current		—			—
Deferred:
Federal		(34,000	)		(48,000	)
State		—			—
Total deferred		(34,000	)		(48,000	)
Increase in valuation allowance		34,000			48,000

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate before provision for income taxes. The sources and tax effect of the differences are as follows:

	2018			2017
Income tax provision at the federal statutory rate		21.0	%		21.0	%
State income taxes, net of federal benefit		—	%		—	%
Effect of net operating loss		(21.0	%)		(21.0	%)
		—	%		—	%

Components of the net deferred income tax assets at March 31, 2019 and 2018 were as follows:

	2019			2018
Net operating loss carryover	$	1,427,000		$	1,393,000
Valuation allowance		(1,427,000	)		(1,393,000	)
		—		$	—

ASC 740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely than not that some portion or all of the deferred tax assets will not be recognized. After consideration of all the evidence, both positive and negative, management has determined that a $1,427,000 and $1,393,000 allowance at March 31, 2019 and 2018, respectively, is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year is $34,000.

As of March 31, 2019, we have a net operating loss carry forward of approximately $6,792,000. The loss will be available to offset future taxable income.

The Company has identified its “major” tax jurisdictions to include the U.S. government. The Company's fiscal 2016 through 2018 federal tax returns remain open by statute.

ENXNET INC 10-K