Income Taxes |
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Income Taxes [Text Block] |
Note 5. Income Taxes Our tax provision is determined using an estimate of our annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2011 and 2010 annual effective tax rate is estimated to be at a combined 40% for the U.S. federal and states statutory tax rate. As of September 30, 2011 and December 31, 2010, there were no tax contingencies recorded. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The significant components of deferred tax assets (at a 40% effective tax rate) as of September 30, 2011 and December 31, 2010 respectively, are as follows:
We have a net operating loss carry-forward for federal and state tax purposes of approximately $28.6 million at September 30, 2011, that is available to offset future taxable income that will begin to expire in the year 2021. For financial reporting purposes, no deferred tax asset was recognized because at September 30, 2011 and December 31, 2010, it is believed that it is more likely than not that substantially all of the net operating losses are presently expected to expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowance was approximately $1.6 million and $3.0 million for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively. Many of the Company's operating expenses in its 2007 and 2006 tax years were classified under the Internal Revenue Code as capitalized "Start-up Costs" which were not deductible for tax purposes until 2008. The Company files a consolidated tax return with its subsidiaries. |