Annual report pursuant to Section 13 and 15(d)

INCOME TAX

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INCOME TAX
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 10 – INCOME TAX

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Net deferred tax assets consist of the following components as of December 31:

 

    2012   2011
Deferred Tax Assets:        
NOL Carryover $  298,300 $  84,000 
Related party accrual   2, 100    69,500 
Payroll accrual   213,300    
Deferred tax liabilities:        
      Depreciation   200   -
Less valuation allowance   (513,900)   (153,500)
Net deferred tax assets  $ -  $                   -
           

 

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended December 31, due to the following:

 

    2012   2011
Book Income (loss)  $ (338,200)  $ (635,500)
Meals and entertainment   2,800    1,000 
Depreciation   500   -
Other nondeductible expenses   37,400   504,500 
Accrued payroll   109,900   69,500 
Valuation allowance   187,600   60,500 
   $ -  $ -

 

At December 31, 2012, the Company had net operating loss carry forwards of approximately $765,000 that may be offset against future taxable income from the year 2012 to 2032. No tax benefit has been reported in the December 31, 2012 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.