Focus Universal Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

7. Income Tax

7. Income Tax

12 Months Ended

Mar. 31, 2015

Deferred Tax Assets

At March 31, 2015 and 2014, the Company had net operating loss (NOL) carryforwards for Federal income tax purposes of $107,195 and $22,854, respectively that may be offset against future taxable income through 2034 and 2033, respectively.

No tax benefit has been reported with respect to these net operating loss carry-forwards in the accompanying financial statements because the Company believes that the realization of the Companys net deferred tax assets of $12,651 and $3,428 as of March 31, 2015 and 2014, respectively was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are fully offset by a valuation allowance.

Components of deferred tax assets at March 31, 2015 and 2014 are as follows:

	For the Year Ended March 31, 2015			For the Year Ended March 31, 2014

Expected income tax benefit from NOL carry-forwards	$	12,651		$	3,428
Less: valuation allowance		(12,651	)		(3,428	)
Deferred tax assets, net of valuation allowance	$			$

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its reliability. The valuation allowance increased $9,223 and $3,076 during the year ended March 31, 2015 and 2014, respectively.

Income Tax Provision in the Statements of Operations

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

	For the Year Ended March 31, 2015			For the Year Ended March 31, 2014

Federal statutory income tax rate		15.0	%		15.0	%
Change in valuation allowance on net operating loss carry-forwards		(15.0	)%		(15.0	)%
Effective income tax rate		0.00	%		0.00	%