Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 5. Income Taxes

     The Company accounts for income taxes under ASC 740, Income Taxes. Deferred income taxes are determined based upon differences between financial reporting and income tax bases of assets and liabilities and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to reverse. The Company recognizes any interest and penalties to unrecognized tax benefits as a component of income tax expense. 

No federal current or deferred income taxes were recorded for the years ended December 31, 2012 and 2011, as the Company's income tax benefits were fully offset by a corresponding increase to the valuation allowance against its net deferred income tax assets. 

At December 31, 2012 and 2011, the Company had federal and state net operating loss carryforwards of $235,000 and $203,340, respectively, available to offset future taxable income. These net operating loss carryforwards will expire in varying amounts beginning in 2022 through 2032. At December 31, 2012 and 2011, the Company had federal capital loss carryforwards of $4,397,000 and 4,400,421 available to offset future taxable income. The capital loss carryforward will expire on December 31, 2013. 

The Tax Reform Act of 1986 limits the annual utilization of net operating loss and tax credit carryforwards, following an ownership change of the Company. Note that as a result of the Company's equity financings in recent years, the Company underwent changes in ownership for purposes of the Tax Reform Act. Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of any of the Company's net operating loss carryforwards may be limited if cumulative changes in ownership of more than 50% occur during any three year period. 

The components of income tax provision (benefit) are as follows:

	December 31,
	2012		2011
Current income taxes:
Federal	$--		$--
State	--		--
Total current income taxes	--		--
Deferred income taxes	99,932		(23,310	)
Change in valuation allowance	(99,932	)	23,310
Provision (benefit) for income taxes	$--		$--

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred income taxes are as follows:

	December 31,
	2012		2011
Current deferred income tax assets	$--		$--
Noncurrent deferred income tax assets:
Net capital loss carryover	1,701,015		1,655,879
Net operating loss carryover difference	90,950		79,200
Stock option compensation	42,338		--
Other temporary basis difference	--		(785	)
	1,834,303		1,734,294
Noncurrent deferred income tax liabilities:
Depreciation	(77	)	--
	(77	)	--
	1,834,226		1,734,294
Valuation allowance	(1,834,226	)	(1,734,294	)
	$--		$--

The reconciliation of the provision for income taxes for the years ended December 31, 2012 and 2011, and the amount computed by applying the statutory federal income tax rate to net loss is as follows:

	December 31,
	2012		2011
Tax provision (benefit) at statutory rate	($48,614	)	($20,263	)
State taxes, net of federal expense	4,422		(3,047	)
Change of valuation allowance	99,932		23,310
Effect of change in tax rates	(55,740	)	--
Effective income tax rate	$--		$--