FEDERAL INCOME TAXES

12 Months Ended

Jun. 30, 2011

NOTE 4: FEDERAL INCOME TAXES

Total income tax benefit is less than the amount computed by multiplying the loss before income taxes by the statutory federal income tax rate. The reasons for the difference and the related tax effects for the year ended June 30, 2011, the six month period ended June 30, 2010 and for the year ended December 31, 2009 are:


	2011	2010	2009
Tax benefit at statutory rates of 34%	$1,137,074	$72,861	$38,770
Non-deductible expense	(34,000)	(8,500)	-
Change in valuation allowance	(1,103,074)	(64,361)	(38,770)
Net income tax benefit	$ -	$ -	$ -
	========	======	======

The components of the deferred tax assets are as follows:


	June 30,	June 30,	December 31,
	2011	2010	2009
Deferred Tax Assets
Net Operating Loss Carryforward	$1,463,517	$342,169	$277,808
Other	-	18,274	18,274
Total Deferred Tax Assets	1,463,517	360,443	296,082
Less Valuation Allowance	(1,463,517)	(360,443)	(296,082)
	$ -	$ -	$ -
	========	=======	=======

The Company has no deferred tax liabilities.

At June 30, 2011, the Company had federal income tax net operating loss carryforwards of approximately $1,463,000 to offset future taxable income, which begins to expire in 2024; therefore, there was no income tax expense or payable as of June 30, 2011.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 109

-Paragraph 136, 172

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 109

-Paragraph 43, 44, 45, 46, 47, 48, 49

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

-Number 210

-Section 08

-Paragraph h

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

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-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

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-Publisher FASB

-Name Accounting Standards Codification

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-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 8: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

+ Details

Earth Energy Reserves, Inc. 10-K