Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.10.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

 

The Company’s financial statements include total net income (loss) before taxes of $904,033 and $(122,583) for the years ended December 31, 2018 and 2017, respectively. The income tax provision/(benefit) consists of the following:

 

    December 31,
    2018   2017
Federal        
    Current   $ 311,183     $ —    
    Deferred     (119,993 )     (25,016 )
State and Local                
    Current     —         —    
    Deferred     13,984       (13,984 )
Change in Valuation allowance     106,009       39,000  
Income tax provision (benefit)   $ 311,183     $ —    

 

Reconciliations of the differences between the provision/(benefit) for income taxes and income taxes at the statutory U.S. federal income tax rate is as follows:

     
    2018   2017
    Amount   Percent of Pretax Income   Amount   Percent of Pretax Income
Current tax at U.S. statutory rate    $ 189,847       21.00 %   $  (41,678 )     34.00 %
Nondeductible/nontaxable items     1,343       0.15 %     1,177       -0.96 %
State taxes, net of federal benefit     —         0.00 %     (12,022 )     9.81 %
State effect of perm items     —         0.00 %     339       -0.28 %
Valuation allowance activity     106,009       11.73 %     38,999       -31.81 %
Deferred rate change     13,984       1.55 %     13,185       -10.76 %
Current/deferred rate differential     —         0.00 %     —         0.00 %
Other             0.00 %             0.00 %
Total Income Tax Provision/(Benefit)   $ 311,183       34.42 %   $ —         0.00 %

 

The components of deferred tax assets and liabilities as of December 31, 2018 and 2017 are as follows: 

    December 31,
    2018   2017
Deferred tax assets:                
    Net operating loss carryovers   $ —       $ 686  
    Start-up cost     145,009       38,314  
Total deferred tax assets     145,009       39,000  
Valuation allowance     (145,009 )     (39,000 )
Deferred tax liabilities:                
    Unrealized gain/loss     —         —    
Net Deferred tax assets/(liabilities), net of allowance   $ —       $ —    

On December 22, 2017, the President signed into law the "Tax Cuts and Jobs Act.” The new tax reform has the following effects on the company: (1) permanently reduces the maximum corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017 (2) allows temporary 100% expensing for certain business assets and property placed in service after September 27, 2017 and before January 1, 2023 (3) disallows NOL carrybacks but allows for the indefinite carryforward of those NOLs which applies to losses arising in tax years beginning after December 31, 2017 and (4) limits NOL deductions for each year equal to the lesser of the available carryover or 80% of a taxpayer's pre-NOL deduction taxable income. This applies to losses arising in tax years beginning after December 31, 2017.

 

As of December 31, 2018 and 2017, the Company has concluded that it is more likely than not that the Company will not realize the benefit of its deferred tax assets associated with Start-up costs. Start-up costs cannot be amortized against future operating income until a business combination has occurred. Therefore, a full valuation allowance has been established prior to the company completing a business combination, as future events such as business combinations cannot be considered when assessing the realizability of Deferred Tax Assets and when the probability of a special purpose acquisition company consummating a business combination is less than 51%. In addition, a reliable forecast of trust investment income and start-up costs expected to be incurred in the period/s prior to a business combination or a dissolution and liquidation is not practicable. Accordingly, the net deferred tax assets have been fully reserved.