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INCOME TAXES
 12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
NOTE 12 - INCOME TAXES

The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company’s predecessor operated as entity exempt from Federal and State income taxes.

 

ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

 

The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34% to the net loss before provision for income taxes for the following reasons:

 

    For the Years Ended  
    December 31,  
    2011     2010  
Book income (loss) from operations   $ (3,359,143 )   $ (12,992 )
Stock/options issued for services     1,922,156       -  
Stock/options issued in executive compensation     649,593       -  
Contributed services     510       680  
Depreciation and amortization     10,105       -  
Impairment expense     799,272       -  
Loss on sale of assets     348       -  
Valuation allowance     (22,841 )     12,312  
Total provision for income taxes   $ -     $ -  

 

Net deferred tax assets consist of the following components as of:

 

    December 31,  
    2011     2010  
Loss carry forwards   $ (3,434,659 )   $ 75,516  
                 
Stock/options issued for services     1,922,156       -  
Stock/options issued in executive compensation     649,593       -  
Contributed services     8,194       7,684  
Depreciation and amortization     10,105       -  
Impairment expense     799,272       -  
Loss on sale of assets     348       -  
Valuation allowance     44,991       (67,832 )
Net deferred taxes   $ -     $ -  

 

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $3,434,659 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.