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EXCEL - IDEA: XBRL DOCUMENT - Novation Holdings IncFinancial_Report.xls
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EX-32 - CERTIFICATION - Novation Holdings Incexhibit32.htm
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10-K - FORM 10-K - Novation Holdings Incf10k8312012.htm
v2.4.0.6
Income Taxes
12 Months Ended
Aug. 31, 2012
Income Taxes:  
Income Tax Disclosure

The Company accounts for income taxes in accordance with accounting standards for Accounting for Income Taxes which require the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carry-forwards. Additionally, the standards require the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.

 

The following is a schedule of deferred tax assets as of August 31, 2012, and August 31, 2011:

 

 

 

August 31, 2012

 

August 31, 2011

Net operating loss

$

9,266,443

$

2,475,744

Future tax benefit at 34%                     

 

3,150,591

 

841,753

Less: Valuation allowance

 

   (3,150,591)

 

   (841,753)

Net deferred tax asset

$

--

$

--

 

The valuation allowance changed by approximately $2,308,838 during the year ended August 31, 2012.

 

Under Sections 382 and 269 (the ‘shell corporation’ rule) of the Internal Revenue Code, following an “ownership change,” special limitations (“Section 382 Limitations”) apply to the use by a corporation of its net operating loss, or NOL, carry-forwards arising before the ownership change and various other carry-forwards of tax attributes (referred to collectively as the ‘Applicable Tax Attributes’). The Company had NOL carry-forwards due to historical losses of Stanford of approximately $368,374 at August 31, 2011.

 

The Company has adopted the provisions of FASB ASC 740-10-25. As a result of its implementation, the Company performed a comprehensive review of its uncertain tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10-25. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a prepared and filed tax return, or expected to be taken in a tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. The Company does not expect any reasonably possible material changes to the estimated amount of liability associated with uncertain tax positions through August 31, 2012. The Company’s continuing policy is to recognize accrued interest and penalties related to income tax matters in income tax expense.