NOTE 4 - INCOME TAXES
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Dec. 31, 2011
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Income Tax Disclosure [Text Block] |
NOTE 4 -
INCOME TAXES
Deferred
income taxes reflect the tax effects of temporary differences
between the carrying amounts of assets and liabilitieis for
financial accounting purposes and the amounts used for income
tax reporting. Significant components of the
Company’s deferred tax assets and liabilities are as
follows:
Significant
components of the Company's deferred tax assets and
liabilities are summarized as follows:
As
of December 31, 2011, the Company has net operating loss
carry forwards of approximately $7,498,000 that can be
utilized to offset future taxable income for Federal income
tax purposes. Net operating loss carry forwards expire
starting in 2025 through 2030. Utilization
of these net loss carry forwards is subject to the
limitations of Internal Revenue Code Section
382. Because of the current uncertainty of
realizing the benefit of the tax carry forward, a valuation
allowance equal to the tax benefit for deferred taxes has
been established.
During
2011, the Company’s Chief Executive Officer, Mr. Meller
waived his rights with respect to the deferred wages and
expenses owed to him as of December 31, 2010 and through the
period of waiver. The Company recorded the waiver
as a capital contribution and recorded the gain through
additional paid in capital.
The
full realization of the tax benefit associated with the carry
forward depends predominantly upon the Company's ability to
generate taxable income during the carry forward
period.
Deferred
tax assets and liabilities reflect the net tax effect of
temporary differences between the carrying amount of assets
and liabilities for financial reporting purposes and amounts
used for income tax purposes.
Accounting
for Uncertainty in Income Taxes. prescribes a recognition
threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. ASC 740-10 requires
that the Company determine whether the benefits of its tax
positions are more-likely-than-not of being sustained upon
audit based on the technical merits of the tax position. The
Company recognizes the impact of an uncertain income tax
position taken on its income tax return at the largest amount
that is more-likely-than-not to be sustained upon audit by
the relevant taxing authority.
There
were no significant uncertain tax positions taken, or
expected to be taken, in a tax return that would be
determined to be an unrecognized tax benefit taken or
expected to be taken in a tax return that should have been
recorded on the Company’s consolidated financial
statements for the year ended December 31, 2011 and
2010.
The
federal and state tax returns for the years ending December
31, 2008, 2009 and 2010 are currently open and the tax
returns for the year ended December 31, 2011 will be filed by
October 15, 2012.
Despite
the Company’s belief that its tax return positions are
consistent with applicable tax laws, one or more positions
may be challenged by taxing authorities. Settlement of any
challenge can result in no change, a complete disallowance,
or some partial adjustment reached through negotiations or
litigation.
Interest
and penalties related to income tax matters, if applicable,
will be recognized as income tax expense. During the years
ended December 31, 2011 and 2010 the Company did not
incur any expense related to interest or penalties for income
tax matters, and no such amounts were accrued as of
December 31, 2011 and 2010.
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