Quarterly report pursuant to Section 13 or 15(d)

INCOME TAXES

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INCOME TAXES
3 Months Ended
Mar. 31, 2013
Income Taxes  
Income Taxes

NOTE 2 - INCOME TAXES

 

As of December 31, 2012, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $3,300,000 that may be offset against future taxable income through 2032.  Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs.  Therefore, the amount available to offset future taxable income may be limited.  No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carry forwards will expire unused.  Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount.

 

 

The Company has the following tax assets:

    December 31,
    2012   2011
Net Operating Losses   $ 1,122,000     $ 1,768,000  
Depreciation and Other     (15,920 )     (21,340 )
Valuation Allowance     (1,106,080 )     (1,746,660 )
    $ —       $ —    

 

The provision for income taxes differ from the amount computed using the federal US statutory income tax rate as follows:

    December 31,
    2012   2011
Provision (Benefit) at US Statutory Rate   $ 548,250     $ (52,200 )
Net Operating Losses     635,580       80,240  
Depreciation and Other     (543,250 )     155,140  
Increase (Decrease) in Valuation Allowance     (640,580 )     (183,180 )
    $ —       $ —    

 

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and causes a change in management's judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income.