Income Taxes

3 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 8 – INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes , which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

Net deferred tax assets consist of the following components as of December 31, 2011 and 2010:

	December 31, 2011			December 31, 2010
Deferred tax assets:
Net operating loss carryover	$	(244,163	)	$	(15,657	)
Impairment expense		1,190			1,190
Discount on debt		9,061			—
Common stock issued for services		70,040			—
Depletion, depreciation, amortization and accretion expense		25,904			—
Change in derivative liability		3,266			—
Valuation allowance		134,703			14,467
Income tax expense per books	$	—		$	—

The income tax provision differs from the amount of income tax determined by applying the estimated U.S. federal and state income tax rates of 34 percent to pretax income from continuing operations for the year ended December 31, 2011 and 2010 due to the following:

	December 31, 2011			December 31, 2010
Income tax expense at statutory rate	$	(228,506	)	$	(11,967	)
Discount on debt		9,061			—
Common stock issued for services		70,040			—
Depletion, depreciation, amortization and accretion expense		25,904			—
Change in derivative liability		3,266			—
Valuation allowance		120,236			11,967
Income tax expense per books	$	—		$	—

At December 31, 2011, the Company had net operating loss carry forwards of approximately $244,163 through 2031. No tax benefit has been reported in the December 31, 2011 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years

Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards 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.