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EXCEL - IDEA: XBRL DOCUMENT - Franchise Holdings International, Inc.Financial_Report.xls
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v2.4.0.6
Income Taxes
12 Months Ended
Sep. 30, 2012
Income Tax Disclosure [Abstract]  
Income Taxes

A reconciliation of the U.S. statutory federal income tax rate to the effective tax rate is as follows:

 

    September 30,  
    2012     2011  
                 
U.S. Federal statutory graduated rate     15.00 %     15.00 %
                 
State income tax rate, net of federal benefit     3.94 %     4.00 %
                 
Net operating loss for which no tax benefit is currently available     -18.94 %     -19.00 %
      0.00 %     0.00 %

 

At September 30, 2012, deferred tax assets consisted of a net tax asset of $353,805, due to operating loss carryforwards of approximately $910,017, which was fully allowed for in the valuation allowance of $353,805.  The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery.  The changes in the valuation allowance for the year ended September 30, 2011 totaled $4,271.  The net operating loss carryforward expires at various times through the year 2032.

  

At September 30, 2011, deferred tax assets consisted of a net tax asset of $349,534, due to operating loss carryforwards of approximately $887,000, which was fully allowed for in the valuation allowance of $349,534.  The valuation allowance offsets the net deferred tax asset for which there is no assurance of recovery.  The changes in the valuation allowance for the year ended September 30, 2011 totaled $2,255.

 

The valuation allowance will be evaluated at the end of each year, considering positive and negative evidence about whether the deferred tax asset will be realized.  At that time, the allowance will either be increased or reduced; reduction could result in the complete elimination of the allowance if positive evidence indicates that the value of the deferred tax assets is no longer impaired and the allowance is no longer required.

 

Should we undergo an ownership change as defined in Section 382 of the Internal Revenue Code, our net tax operating loss carryforwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses.