Table:
|  | 2019 | 2018 |
| --- | --- | --- |
| Tax benefit computed at the statutory rate | $(427,244) | $(631,497) |
| State taxes | 6,525 | 6,874 |
| Book expenses not deductible for tax purposes | 2,980 | 2,882 |
| Rate Change | 45,656 | – |
| Other | 2,517 | (27,286) |
|  | (369,566) | (649,027) |
| Change in valuation allowance for deferred tax assets | 269,203 | 658,650 |
| Income tax (benefit) expense | $(100,363) | $9,623 |
Paragraphs:
NOTE L – INCOME TAXES
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, the following that impact the Company: (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) eliminating the corporate alternative minimum tax; (3) creating a new limitation on deductible interest expense; (4) limiting the deductibility of certain executive compensation; and (5) limiting certain other deductions.
The Company follows ASC 740-10 “Income Taxes” which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
A reconciliation of tax expense computed at the statutory federal tax rate on loss from operations before income taxes to the actual income tax (benefit) /expense is as follows:
Question:
Which guide does the Company follow to determine their deferred tax liabilities and assets?
Answer: ASC 740-10 “Income Taxes”