Psychic Friends Network Inc. - FORM 10-K - XML - IDEA: XBRL DOCUMENT - January 8, 2013

NOTE 6 - INCOME TAXES

The Company provides for income taxes under FASB ASC 740,  Accounting for Income

Taxes.  FASB ASC 740  requires  the use of an asset and  liability  approach  in

accounting for income taxes.  Deferred tax assets and  liabilities  are recorded

based on the differences between the financial statement and tax bases of assets

and liabilities.

FASB ASC 740  requires  the  reduction  of  deferred  tax assets by a  valuation

allowance, if, based on the weight of available evidence, it is more likely than

not that some or all of the  deferred  tax assets will not be  realized.  In the

Company's opinion, it is uncertain whether they will generate sufficient taxable

income in the future to fully utilize the net deferred tax asset. Accordingly, a

valuation allowance equal to the deferred tax asset has been recorded. The total

deferred tax asset is $90,946 which is calculated by multiplying a 34% estimated

tax rate by the  cumulative  net operating loss (NOL) adjusted for the following

items:

For the period ended September 30,            2012                    2011

----------------------------------         ----------              ----------

Book loss for the year                     $ (379,562)             $  (20,452)

Adjustments:

  Meals and entertainment                       1,496                      --

  Stock based compensation                     93,750                      --

  Unpaid payroll taxes                         16,829                      --

                                           ----------              ----------

Tax loss for the year                        (265,058)                (20,452)

Estimated effective tax rate                       34%                     34%

                                           ----------              ----------

Deferred tax asset                         $  (90,946)             $   (6,954)

                                           ==========              ==========

The total valuation  allowance is $90,946.  Details for the last two periods are

as follows:

For the period ended September 30,            2012                    2011

----------------------------------         ----------              ----------

Deferred tax asset                         $   90,946              $    6,954

Valuation allowance                           (90,946)                 (6,954)

                                           ----------              ----------

Net deferred tax asset                             --                      --

                                           ----------              ----------

Income tax expense                         $       --              $       --

                                           ==========              ==========

Below  is a  chart  showing  the  estimated  corporate  federal  cumulative  net

operating  loss (NOL) carry  forward of $342,559  and the years in which it will

expire.

    Year                                    Amount              Expiration

    ----                                    ------              ----------

2012                                      $ 267,487            2032

2011                                      $  20,452            2031

Prior to 2011                             $  54,620            Prior to 2031