CORRESP 1 filename1.txt June 30, 2006 Joyce Sweeney Securities and Exchange Commission Washington, D.C. 20549 RE: Synergy Financial Group, Inc. Form 10-K for the Fiscal Year Ended December 31, 2005 File No. 000-50467 Dear Ms. Sweeney: We have received your letter dated June 20, 2006 and would like to provide you with the following response to the questions raised regarding the December 31, 2005 Form 10-K for Synergy Financial Group, Inc. (the "Company"). Note I - Income Taxes, page 78 The entire valuation allowance of $878,000 reported for the last three years in our Income Tax footnote relates to the Net Operating Loss ("NOL") carry over assumed from the Company's acquisition of First Bank of Central Jersey ("FBCJ") on January 10, 2003, which was accounted for under purchase accounting. We calculated the annual Section 382 limitation on the FBCJ NOL and scheduled out the prospective annual usage of the NOL for the relevant carry over period and concluded that the NOL would expire before it can be fully utilized. Based on the attached NOL carry over schedule, management concluded to provide a valuation allowance against the deferred tax asset to account for the fact that the FBCJ NOL will more likely than not expire before it can be used within the limitations of Section 382. The allowance never changes since the variables used to determine it do not change - they are locked it at the acquisition date. The only variable that could change is the tax law and to date, the tax law has not changed. In connection with the above response, we acknowledge the following statements: o the Company is responsible for the adequacy and accuracy of the disclosure in the filing; o staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking action with respect to the filing; and o the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. I trust this clarifies the comments you raised during your review of our Form 10-K. Sincerely, /s/A. Richard Abrahamian ------------------------------------------------- A. Richard Abrahamian Senior Vice President and Chief Financial Officer Synergy Financial Group, Inc. FIRST BANK OF CENTRAL JERSEY SECTION 382 LIMITATION
Purchase Price 2,100,000 Adjusted Fed Long Term T/E Rate - Dec 2002 4.65% (Jan 2003 was not available) -------- (IRS published rate) Sec. 382 Annual Limit 97,650 ======== NOL Carryforward: 1998 (131,587)Carryforward to 2018 (from FBCJ tax returns) 2001 (1,833,444)Carryforward to 2021 2002 (2,517,118)Carryforward to 2022 2003 (149,916)Carryforward to 2023 ---------- (4,632,065) $(4,632,065) ========== 34% ---------- 1,574,902 Deferred Tax Asset allowed on the $4,632,065 1998 2001 2002 2003 Loss Loss Loss Loss Totals Year Utilized Utilized Utilized Utilized (max 97,650/yr) ---------------------------------------------------------------- 2003 97,650 97,650 (4,534,415) ------------------------------------------------------------------------------- 2004 33,937 63,713 97,650 (4,436,765) ------------------------------------------------------------------------------- 2005 97,650 97,650 2006 97,650 97,650 34% ---------- 2007 97,650 97,650 (1,508,500) ========== 2008 97,650 97,650 2009 97,650 97,650 2010 97,650 97,650 2011 97,650 97,650 2012 97,650 97,650 2013 97,650 97,650 2014 97,650 97,650 2015 97,650 97,650 2016 97,650 97,650 2017 97,650 97,650 2018 97,650 97,650 2019 N/A 97,650 97,650 2020 N/A 97,650 97,650 2021 N/A 97,650 97,650 2022 N/A N/A 97,650 97,650 2023 N/A N/A N/A 97,650 97,650 2024 ------------------------------------------------------------- 131,587 1,723,763 97,650 97,650 2,050,650 2,050,650 NOL 34% Tax Rate ---------- 697,221 Deferred Tax Asset - Actual ========== (2,581,415) $ (877,681) Valuation allowance ==========