Income taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

Income taxes

8.      Income Taxes

The Company has accumulated net operating losses, which can be used to offset future earnings.  Accordingly, no provision for income taxes is recorded in the consolidated financial statements. A deferred tax asset for the future benefits of net operating losses and other differences is offset by a 100% valuation allowance due to the uncertainty of the Company’s ability to utilize the losses. These net operating losses will expire in the years 2029 through 2031.

The Company had net operating loss carryforwards of approximately $1,030,000 at December 31, 2011.  These net operating loss carryforwards may be limited in accordance with Section 382 of the Internal Revenue Code of 1986, as amended, based on certain changes in ownership that have occurred and that could occur in the future.

The tax effects (computed at 40%) of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities consist of the following:

				Current
				period
	2010			changes			2011
Deferrred tax assets:
Net operating loss carryforwards	$	196,000		$	215,000		$	411,000
Loan receivable		-			56,000			56,000
Accounts payable and accrued expenses		-			39,000			39,000
Valuation allowance		(196,000	)		(310,000	)		(506,000	)
Net deferred tax assets	$	-		$	-		$	-

A reconciliation of income benefit provided at the federal statutory rate of 34% to income tax benefit is as follows:

	2011			2010
Income tax benefit computed at federal statutory rate		34	%		34	%
State taxes, net of federal tax benefit		6	%		6	%
Valuation allowance		(40	)%		(40	)%
Effective tax rate		0	%		0	%