INCOME TAXES |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2016 | ||||
| Income Tax Disclosure [Abstract] | ||||
| Income Tax Disclosure [Text Block] |
The tax provision for the quarters ended March 31, 2016 and 2015 was $42,780 and $9,624, respectively. Due to the valuation allowance recorded against all net deferred tax assets, no income tax benefit was recorded for the three months ended March 31, 2016 and 2015. The provision for the three months ended March 31 2016 and 2015 represents state minimum taxes, taxes attributable to Pakistan and for 2016, a deferred tax provision of $37,000 related to the amortization of goodwill. Goodwill is not amortized for financial reporting purposes; however, it is deductible and therefore amortized over 15 years for tax purposes. As such, deferred income tax expense and a deferred tax liability arise as a result of the tax deductibility of this indefinitely-lived asset. The resulting deferred tax liability, which is expected to continue to increase over the amortization period, will have an indefinite life. This deferred tax liability could remain on the Company’s consolidated balance sheet indefinitely unless there is an impairment of goodwill (for financial reporting purposes) or a portion of the business is sold. Although the Company is forecasting a return to profitability, it incurred cumulative losses which make realization of a deferred tax asset difficult to support in accordance with Accounting Standards Codification (“ASC”) 740. Accordingly, a valuation allowance has been recorded against all Federal and state deferred tax assets as of March 31, 2016 and December 31, 2015. The Company’s plan to repatriate earnings in Pakistan to the United States requires that U.S. Federal taxes be provided on the Company’s earnings in Pakistan. For state tax purposes, the Company’s Pakistan earnings generally are not taxed due to a subtraction modification available in most states. |