Note 3 - Income Taxes

12 Months Ended

Dec. 31, 2012

Notes

Note 3 - Income Taxes

NOTE 3 - INCOME TAXES

The Company follows the provisions of ASC Topic 740, “Income Taxes.”  No provision for income taxes has been made in the 2011 consolidated statements as all of the consolidated entities were “pass through” entities through March 27, 2012. The net loss for the year ended December 31, 2012 includes approximately $637,288 that Summer Energy, LLC incurred through March 27, 2012, whereby each member is individually liable for tax on their share of the Company’s income or loss. 

Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal income tax of 34% to pretax income as a result of the following:

	December 31, 2012
Provision (benefit) at statutory rate	$                  (550,000)
Loss incurred through March 27, 2012	217,000
Change in valuation allowance	320,000
Others	13,000
	$                                 -

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 are presented below:

	December 31, 2012
Deferred tax assets:
Net operating loss carrryforward- Federal	$                332,000
Allowance for bad debt	9,000
Other assets	14,000
Total gross deferred tax assets	355,000
Valuation allowance	(320,000)
Net deferred tax assets	35,000
Deferred tax liabilities:
Property and equipment	(35,000)
Deferred tax liabilities	(35,000)
Net deferred tax assets	-

The Company has determined that a valuation allowance of $320,000 at December 31, 2012 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in valuation allowance for 2012 was $320,000. As of December 31, 2012, the Company has a net operating loss carry-forward of $977,000 which is available to offset future federal taxable income, if any, with expiration starting in 2032.