Galaxy Gaming, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 15. INCOME TAXES

The components of the provision (benefit) consist of the following:

	2014			2013
Current:
Federal	$	6,430		$	14,491
State		3,305			20,164
Total current	$	9,735		$	34,655
Deferred:
Federal		350,338			(129,228	)
State		1,115			(8,117	)
Change in valuation allowance		(221,443	)		172,457
Total deferred	$	130,010		$	35,112
Provision (benefit) for income taxes	$	139,745		$	69,767

The income tax provision (benefit) differs from that computed at the federal statutory corporate income tax rate as follows for years ended December 31, 2014 and 2013:

	2014			2013
Tax provision/(benefit) computed at the federal statutory rate	$	68,787		$	215,249
State income tax (provision), net of federal benefit		3,067			18,600
Permanent items		95,916			(166,522	)
Credits		(83,978	)		(170,017	)
True ups and rounding		206,719			—
Change in valuation allowance		(221,443	)		172,457
Uncertain tax positions		70,677			—
Income tax provision (benefit)	$	139,745		$	69,767

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following at December 31, 2014 and 2013:

	2014			2013
Deferred Tax Assets:
Current deferred tax assets	$	48,000		$	—
Intangible assets		96,000			202,737
Unrealized foreign currency translation		8,000			157,077
Research & development credits		205,000			111,150
Other		50,035			39,983
Total deferred tax assets		407,035			510,947

Deferred Tax Liabilities:
Basis difference in fixed assets		(148,000	)		(47,278	)
Uncertain tax positions		(68,000	)		—
Total deferred tax liabilities		(216,000	)		(47,278	)

Gross deferred tax asset (liability)		191,035			463,669
Less: valuation allowance		—			—
Net deferred tax assets	$	191,035		$	463,669

In accordance with ASC Topic 740, we analyzed our valuation allowance at December 31, 2014 and determined that, based upon available evidence, it is more likely than not that certain of its deferred tax assets will be realized and, as such, has removed any valuation allowance against certain deferred tax assets. We anticipate utilization of both our foreign tax credits and research credit carryforwards.

As of December 31, 2014, we expect to use all of our foreign tax credits of $74,577. The foreign tax credits will be used to offset federal income tax owed in 2014.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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