Income Tax Provision

9 Months Ended

Mar. 31, 2020

Deferred Tax Assets

At March 31, 2020, the Company had net cumulative operating loss (“NOL”) carry–forwards for Federal income tax purposes of $39,762 that may be offset against future taxable income through 2039. No tax benefit has been recorded with respect to these net operating loss carry-forwards in the accompanying financial statements as the management of the Company believes that the realization of the Company’s net deferred tax assets of approximately $8,350 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by the full valuation allowance.

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards which was used to offset tax payable from prior year’s operations. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding its realization. The current valuation of tax allowance is n/a as of March 31, 2020.

Components of deferred tax assets are as follows:

	March 31, 2020
Net Deferred Tax Asset Non-Current:
Net Operating Loss Carry-Forward before income taxes	$	(39,762	)
Income tax rate		21	%
Expected Income Tax Benefit from NOL Carry-Forward		8,350
Less: Valuation Allowance		(8,350	)
Deferred Tax Asset, Net of Valuation Allowance	$	-

Income Tax Provision in the Statement 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:

	March 31, 2020

Federal statutory income tax rate		21.0	%
Increase (reduction) in income tax provision resulting from:
Net Operating Loss (NOL) carry-forward		(21.0	)%
Effective income tax rate		0.0	%

Tax Returns Remaining subject to IRS Audits

The Company has filed its corporation income tax return for the year ended June 30, 2019, which will remain subject to examination by the Internal Revenue Service under the statute of limitations for a period of three (3) years from the date it is filed.

AXELEREX CORP. 10-Q