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SBLM ARCHITECTS, P.C. (AN S CORPORATION) NOTES TO FINANCIAL STATEMENT DECEMBER 31, 2009 NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fair Value The Company has a number of financial instruments, none of which are held for trading purposes. The Company estimates that the fair value of all financial instruments at December 31, 2009, does not differ materially from the aggregate carrying values of its financial instruments recorded in the accompanying balance sheet. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. Considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value, and accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Income Taxes The Company elected to be taxed as an "S" Corporation for Federal and various state purposes. In lieu of corporate income taxes, the shareholders of an S corporation are taxed on their proportionate share of the Company's taxable income. Therefore. no provision or liability for Federal income taxes has been included in the financial statements. Under New York State tax laws, a minimum tax is due regardless of S Corporation status. The Company is taxed as a corporation for New York City and various state purposes. Deferred income taxes arise primarily from the Company's recognition of income and expense on the cash receipts and disbursements basis for tax purposes and on the accrual basis for financial statement purposes. Income taxes are reported based upon the Company's adoption of the Statement of Financial Accounting Standards Number 109 "Accounting for Income Taxes". Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.