Annual report pursuant to section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
12 Months Ended
Oct. 31, 2011
Notes to Financial Statements  
Income Taxes

NOTE 5 - INCOME TAXES
 
The Company accounts for income taxes under ASC Topic 740: Income Taxes which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carryforwards.  ASC Topic 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. The Company has a net operating loss carryforward for tax purposes totaling approximately $32,900 at October 31, 2011, expiring through the year 2031. Internal Revenue Code Section 382 places a limitation on the amount of taxable income that can be offset by carryforwards after certain ownership shifts.
 
The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the period ended:
 
   
October 31, 2011
   
October 31, 2010
Tax benefit computed at “expected” statutory rate
  $ (25,648 )   $ (1,635 )
State income taxes, net of benefit
    (5,280 )     (337 )
Increase in valuation allowance
    30,928       1,972  
Net income tax benefit
  $ -     $ -  
 
The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the period ended:
 
   
October 31, 2011
   
October 31, 2010
 
             
Computed "expected" tax expense (benefit)
    (34.0 )%     (34.0 )%
State income taxes
    (7.0 )%     (7.0 )%
Change in valuation allowance
    41.0 %     41.0 %
                 
Effective tax rate
    0.0 %     0.0 %
 
The Company has a deferred tax asset which is summarized as follows at October 31, 2011 and 2010, respectively:
 
   
Deferred tax assets:
           
Net operating loss carryover
  $ 13,489     $ 809  
Less: valuation allowance
    (13,489 )     (809 )
Net deferred tax asset
  $ -     $ -  
 
After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at October 31, 2011, due to the uncertainty of realizing the deferred income tax assets.  The valuation allowance was increased by $12,680.