INCOME TAXES

12 Months Ended

Dec. 31, 2011

NOTE 11 – INCOME TAXES

As of December 31, 2011, the Company had available net operating loss carry forwards for federal and state tax purposes of $64.2 million and $58.0 million, respectively, which begin to expire in 2025 and 2015, respectively. The Company also had available as of December 31, 2011, federal and state statutory depletion allowance carry forwards of $1.6 million and $0.7 million, respectively, which do not expire.

A reconciliation of the income tax benefit computed at the statutory tax rates to the provision for income taxes as shown in the results of operations for the years ended December 31, 2011 and 2010 is summarized below:

	2011			2010
Statutory federal tax rate	$	3,971,209		$	2,984,184
Expected state tax, net of federal		681,459			512,086
Effect of permanent differences		(169,174	)		(1,122,252	)
Other		438,201			(97,910	)
		4,921,695			2,276,108
Change in valuation allowance		(4,921,695	)		(2,276,108	)
Provision for (recovery of) income taxes	$	-		$	-

Significant components of the Company’s deferred tax assets and liabilities were as follows:

	2011						2010
	Assets			Liabilities			Assets			Liabilities
Oil and gas properties and equipment	$	-		$	(1,405,912	)	$	-		$	(1,323,237	)
Tax loss carry-forward		26,962,437			-			21,967,403			-
Statutory depletion carry-forward		591,266			-			581,930			-
Valuation allowance		(27,553,703	)		1,405,912			(22,549,333	)		1,323,237
Deferred tax asset (liability)	$	-		$	-		$	-		$	-

A deferred tax liability of $1.3 million was recognized from amounts previously reported as of December 31, 2010 for deferred taxes associated with the timing of the tax deductibility of oil and gas properties and equipment.

Realization of the Company’s net deferred tax assets is dependent on the Company being able to generate sufficient taxable income prior to the expiration of the items giving rise to the net deferred tax assets. Due to the Company’s continuing losses, management has concluded that it is unlikely that there will be sufficient future taxable income to realize the benefits of the temporary differences, including operating loss carry forwards, prior to their expiration. Accordingly, as of December 31, 2011 and 2010, a valuation allowance has been provided for the entire amount of the deferred tax assets and liabilities.

- 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

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-Name Statement of Financial Accounting Standard (FAS)

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-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)

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-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

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

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+ Details

TRI VALLEY CORP 10-K