桃汁影院, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes

Income Taxes

12 Months Ended

Apr. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

The components of income tax expense (benefit) are as follows:

For the Years Ended

April 30,

2017

2016

Current:

Federal

—

State

—

Deferred:

Federal

—

State

—

Total Income tax expense (benefit)

—

Significant components of the Company's deferred income tax assets and liabilities are as follows:


	April 30,
	2017			2016
Deferred tax assets:
Net operating loss	$	8,626,748		$	8,271,894
Allowance for doubtful accounts (recovery)		(20,029	)		26,793
Intangible assets		201,942			249,099
Deferred rent		16,911			11,678
Stock-based compensation		820,257			694,900
Contributions carryforward		93			93
Total deferred tax assets		9,645,922			9,254,457

Deferred tax liabilities:
Property and equipment		(174,260	)		(185,683	)
Total deferred tax liabilities		(174,260	)		(185,683	)

Deferred tax assets, net		9,471,662			9,068,774


Valuation allowance:
Beginning of year		(9,068,774	)		(8,240,200	)
(Increase) during period		(402,888	)		(828,574	)
Ending balance		(9,471,662	)		(9,068,774	)

Net deferred tax asset	$	—		$	—

A valuation allowance is established if it is more likely than not that all or a portion of the deferred tax asset will not be realized. The Company recorded a valuation allowance at April 30, 2017 and 2016 due to the uncertainty of realization. Management believes that based upon its projection of future taxable operating income for the foreseeable future, it is more likely than not that the Company will not be able to realize the tax benefit associated with deferred tax assets. The net change in the valuation allowance during the year ended April 30, 2017 was an increase of $402,888.

At April 30, 2017, the Company had $20,204,869 of net operating loss carryforwards which will expire from 2032 to 2037. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of April 30, 2017, tax years 2013 through 2016 remain open for IRS audit. The Company has received no notice of audit from the Internal Revenue Service for any of the open tax years.

A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows:


	April 30,
	2017			2016
Statutory U.S. federal income tax rate		34.0	%		34.0	%
State income taxes, net of federal tax benefit		3.0			3.0
Other		(0.5	)		(0.1	)
Change in valuation allowance		(36.5	)		(36.9	)
Effective income tax rate		0.0	%		0.0	%