Annual report pursuant to Section 13 and 15(d)

Income Tax

v3.10.0.1
Income Tax
12 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Tax

8. INCOME TAX

The sources of loss before provision for income taxes are as follows for the period ended September 30, 2018:

 

 

 

Period from

October 9, 2017

(Date of Inception)

through

September 30,

2018

 

Domestic

 

$

(64,937

)

Foreign

 

 

 

Total

 

$

(64,937

)

 

The provision for income taxes was comprised of the following for the period ended September 30, 2018:

 

 

 

Period from

October 9, 2017

(Date of Inception)

through

September 30,

2018

 

Current:

 

 

 

 

Federal

 

$

440,038

 

State and local

 

 

160,410

 

Foreign

 

 

 

Total Current

 

 

600,448

 

Deferred:

 

 

 

 

Federal

 

 

 

State and local

 

 

 

Foreign

 

 

 

Total deferred income tax expense

 

 

 

Total provision for income taxes

 

$

600,448

 

 

Reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

 

 

 

Period from

October 9, 2017

(Date of Inception)

through

September 30,

2018

 

Statutory income tax expense

 

$

(15,747

)

State income taxes, net of federal

 

 

(4,348

)

Tax Cuts and Jobs Act

 

 

60,156

 

Other permanent items

 

 

7,746

 

Valuation allowance on start-up costs

 

 

552,641

 

Provision for income taxes

 

$

600,448

 

For the period ended September 30, 2018, the effective tax rate differs from the U.S. statutory rate primarily due to the impact of the Tax Act, the valuation allowance on the Start-up Costs, and tax expense associated with nondeductible permanent adjustments.

On December 22, 2017, the Tax Act was signed into law. The change in the tax law is partially effective in the current 2018 fiscal year and will be fully effective in the 2019 fiscal year. The Tax Act, among other things, reduces the top U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings.

Due to the complexities involved in accounting for the Tax Act, the Securities and Exchange Commission Staff Accounting Bulletin 118 required that the Company include in its financial statements a reasonable estimate of the impact of the Tax Act on earnings to the extent such reasonable estimate has been determined. The Company is allowed a measurement period of up to one year after the enactment date to finalize the recording of the related tax impacts. As of September 30, 2018, the Company completed its accounting for the tax effects of the enactment of the Tax Act.

The Tax Act reduces the corporate federal tax rate to 21%, effective January 1, 2018. U.S. tax law stipulates that the Company’s 2018 earnings are subject to a blended statutory tax rate of 24.3%, which is based on the prorated number of days in the fiscal year before and after the effective date.

The one-time transition tax is based on total post-1986 earnings and profits that were previously deferred from U.S. income taxes. We have no foreign operations or subsidiaries and therefore the one-time transition tax is not applicable to the Company.

As mentioned above, the Company has no foreign operations or subsidiaries. Therefore, it does not anticipate the new Tax Act provision on global intangible low-tax income or the newly enacted Base Erosion and Anti-Abuse Tax to have an impact on its financial statements in future periods. These facts could change if an acquisition is made that included foreign operations or activities.

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of September 30, 2018 were as follows:

 

 

 

Period from October 9, 2017 (Date of Inception) through September 30, 2018

 

Deferred Tax Assets:

 

 

 

 

Start-up costs

 

$

552,641

 

Valuation allowance

 

 

(552,641

)

Net deferred tax assets (liabilities)

 

$

-

 

 

As of September 30, 2018, the Company has recorded a valuation allowance of $552,641 to offset deferred tax assets related to its start-up costs.

As of September 30, 2018, the Company has no unrecognized tax benefits for which a liability should be recorded. The Company records interest and penalties associated with unrecognized tax benefits as a component of tax expense. As of September 30, 2018, the Company has not accrued interest or penalties on unrecognized tax benefits, as there is no position recorded as of 2018. No changes to the uncertain tax position balance are anticipated within the next 12 months, and are not expected to materially impact the financial statements.