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Income taxes
9 Months Ended
Sep. 30, 2011
Income Taxes 
Income taxes
NOTE 8
Income taxes
Deferred income tax assets and liabilities are computed annually for the differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable on the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.
 
The provisions for income taxes differ from the amount computed by applying the statutory federal income tax rate to Income before provision for income taxes. The source and tax effects of the differences are as follows:
 
 U.S. federal statutory rate       
    
34.00
%
 Valuation reserve     
    
34.00
%
 Total       
    
0.00
%

The Company accounts for the income taxes under ASC Codification Topic 740 and SFAS No. 109, “Accounting for Income Taxes”, which requires the use of the liability method.   SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.   Deferred tax assets and liabilities at the end of each period are determined using the current enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

On or around July 25, 2011 the IRS charged the Company with $20,000 civil penalty for failure to file Form 5471. The Company is contesting this penalty and has notified the IRS accordingly, but has accrued the penalty in the event that its appeal is unsuccessful. The Company is current with its IRS filing requirement and filed its tax returns for the fiscal year of 2010.