Annual report pursuant to section 13 and 15(d)

Note 6 - Income Taxes

Note 6 - Income Taxes
12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Note 6 - Income Taxes

Note 6 – Income taxes


The Company files income tax returns with the Internal Revenue Service (“IRS”) and various state jurisdictions. For jurisdictions in which tax filings are prepared, the Company is subject to income tax examinations by state tax authorities and federal tax authorities for all tax years.


The deferred tax assets are mainly comprised of net loss carryforwards. As of December 31, 2012, the Company had approximately $550,000 of net operating loss carryforwards, that it can use to offset a certain amount of taxable income in the future. These net operating loss carryforwards expire through 2032. The resulting deferred tax asset is offset by a 100% valuation allowance due to the uncertainty of its realization.


A reconciliation of the provision for income tax expense with the expected income tax computed by applying the federal statutory income tax rate to income before provision for income taxes was as follows for the years ended December 31, 2012 and 2011:


    2012       2011  
Income tax computed at federal statutory tax rate   -34.0 %     -34.0 %
Change in valuation allowance   39.8 %     39.8 %
State taxes, net of federal benefit   -5.8 %     -5.8 %
Total   0.0 %     0.0 %


The primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income before provision for income taxes relates to the change in the valuation allowance.


The Company has adopted the accounting standards that clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the years ended December 31, 2012 and 2011.