NOTE 7. INCOME TAXES

United States

Longduoduo is subject to the U.S. corporation tax rate of 21%.

Hong Kong

Longduoduo HK was incorporated in Hong Kong and is subject to Hong Kong profits tax. Longduoduo HK is subject to Hong Kong taxation on its activities conducted in Hong Kong and income arising in or derived from Hong Kong. The applicable statutory tax rate is 16.5%. The Company did not have any income (loss) subject to the Hong Kong profits tax.

China

Longduoduo Health Technology and subsidiaries are subject to a 25% standard enterprise income tax in the PRC. There was no provision for income taxes for the three months ended September 30, 2022 and 2021.

A reconciliation of income before income taxes for domestic and foreign locations for the three months ended September 30, 2022, and 2021 is as follows:

The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows:

The Company did not recognize deferred tax assets since it is not likely to realize such deferred taxes. The deferred tax would apply to Longduoduo in the U.S. and Longduoduo Health Technology and subsidiaries in China.

As of September 30, 2022, Longduoduo Health Technology and its subsidiaries has total net operating loss carry forwards of approximately $1,215,835 in the PRC that expire through 2027. Due to the uncertainty of utilizing these carry forwards, the Company provided a 100% allowance on all deferred tax assets of approximately $303,959 and $238,921 related to its operations in the PRC as of September 30, 2022 and June 30, 2022, respectively. The PRC valuation allowance has increased by approximately $65,038 and $48,438 for the three months ended September 30, 2022, and 2021, respectively.

The Company has incurred losses from its United States operations during the three months ended September 30, 2022 of approximately $57,410. The Company’s United States operations consist solely of ownership of its foreign subsidiaries, and the losses arise from administration expenses. Accordingly, management provided a 100% valuation allowance of approximately $60,179 and $48,123 against the deferred tax assets related to the Company’s United States operations as of September 30, 2022 and June 30, 2022, respectively, because the deferred tax benefits of the net operating loss carry forwards in the United States are not likely to be utilized. The US valuation allowance has increased by approximately $12,056 and $4,579 for the three months ended September 30, 2022, and 2021, respectively.

The Company is subject to examination by the Internal Revenue Service (IRS) in the United States as well as by the taxing authorities in China, where the Company has significant business operations. The tax years under examination vary by jurisdiction. The table below presents the earliest tax year that remain subject to examination by major jurisdiction.