• Filing Date: 2018-11-13
  • Form Type: 10-Q
  • Description: Quarterly report
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INCOME TAXES
9 Months Ended
Sep. 30, 2018
Income Taxes  
INCOME TAXES

Our income tax provision for the three months ended September 30, 2018 was $22,082 compared to a benefit of $225,142 for the three months ended September 30, 2017. The decrease in the tax benefit recorded is due primarily to the full valuation allowance on our deferred tax assets and a provision for state income taxes in 2018.

 

Our income tax provision for the nine months ended September 30, 2018 was $22,082, compared to a benefit of $964,377 for the nine months ended September 30, 2017. The decrease in the tax benefit recorded is due primarily to the full valuation allowance on our deferred tax assets and a provision for state income taxes in 2018. The Company established a valuation allowance against deferred tax assets during 2017 and has continued to maintain a full valuation allowance through the nine months ended September 30, 2018. Therefore, no tax benefit was recognized for the losses during the nine months ended September 30, 2018.

 

The Company files income tax returns in the United States and in various state and foreign jurisdictions. No U.S. Federal, state or foreign income tax audits were in process as of September 30, 2018.

 

Management has evaluated the recoverability of the net deferred income tax assets and the level of the valuation allowance required with respect to such net deferred income tax assets. After considering all available facts, the Company fully reserved for its net deferred tax assets because management believes that it is more likely than not that these benefits will not be realized in future periods. The Company will continue to evaluate its deferred tax assets to determine whether any changes in circumstances could affect the realization of their future benefit. If it is determined in future periods that portions of the Company’s net deferred income tax assets satisfy the realization standard, the valuation allowance will be reduced accordingly.

 

For the three and nine months ended September 30, 2018, Novume did not record any interest or penalties related to unrecognized tax benefits. It is the Company’s policy to record interest and penalties related to unrecognized tax benefits as part of income tax expense. The 2014 through 2017 tax years remain subject to examination by the IRS.

 

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Act”) was enacted, which changes U.S. tax law and includes various provisions that impact our Company. The 2017 Act effects our Company by (i) changing U.S. tax rates, (ii) increasing the Company’s ability to use accumulated net operating losses generated after December 31, 2017, and (iii) limits the Company’s ability to deduct interest.