Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

4.     Income Taxes

Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes.  The Company's deferred tax assets consist entirely of the benefit from net operating loss (NOL) carryforwards.  The net operating loss carryforwards, if not used, will expire in various years through 2031, and are severely restricted as per the Internal Revenue code if there is a change in ownership.  The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the net operating loss carryforwards.  Net operating loss carryforwards may be further limited by other provisions of the tax laws.

The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows:

Period Ending	Estimated NOL Carry-forward	NOL Expires	Estimated Tax Benefit from NOL	Valuation Allowance	Change in Valuation Allowance	Net Tax Benefit
December 31, 2010	$ 500,000	Various	113,250	113,250	$(3,963)	$—
June 30, 2011	15,953	2031	$0	$(0)	0	$—

Income taxes at the statutory rate are reconciled to the Company’s reported income tax expense (benefit) as follows:

Federal tax expense (benefit) at statutory rate	(15.00	%)
State tax expense (benefit), net of federal tax	(7.65	%)
Deferred income tax valuation allowance	22.65	%
Reported tax rate	0	%

The Company also paid franchise taxes and related fees totaling $328 in 2010 to the State of California.  At June 30, 2011 and December 31, 2010, the Company had accrued franchise taxes and related fees payable to the State of California totaling $1,200 and $nil, respectively.