Annual report pursuant to section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2011
INCOME TAXES

NOTE 5 – INCOME TAXES:

 

At December 31, 2011 and 2010, components of net deferred tax assets, including a valuation allowance, are as follows at December 31:

 

    2011     2010  
Deferred tax assets:                
Non-deductible start-up costs   $ 403,000     $ 110,000  
Total deferred tax assets     141,000       39,000  
Less: Valuation Allowance     (141,000 )     (39,000 )
Net Deferred Tax Assets   $ -     $ -  

 

The valuation allowance for deferred tax assets as of December 31, 2011 and 2010 was $141,000 and $39,000, respectively. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The deferred tax asset is created as a result of the start-up expenses, which are not deductible for tax purposes and as a result create a basis difference. They will only become deductible if the Company comes out of the development stage. Management considers the projected future taxable income and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of December 31, 2011 and 2010, and recorded a full valuation allowance.

 

Reconciliation between the statutory rate and the effective tax rate is as follows for the years ended December 31:

 

    2011     2010  
Federal statutory tax rate     (35 )%     (35 )%
Change in valuation allowance     35 %     35 %
Effective tax rate     0 .0%      0 .0%