Annual report pursuant to section 13 and 15(d)

INCOME TAXES

v2.4.0.8
INCOME TAXES
 12 Months Ended
Dec. 31, 2012
INCOME TAXES [Abstract]  
Income Taxes
NOTE 12
INCOME TAXES
 
The components of current and deferred federal and state income tax expense (benefit) for continuing operations for the years ended December 31, consisted of the following (in thousands):

  
2012
    
2011
    
2010
  
Federal income tax (benefit) expense - current
  
$
(2,107
)
  
$
2,043
    
$
112
  
Federal income tax expense - deferred
    
11
      
1,938
      
218
  
State income tax expense (benefit) - current
    
191
      
92
      
(85
)
State income tax (benefit) expense - deferred
    
(246
)
    
5
      
(10
)
Total income tax expense (benefit)
  
$
(2,151
)
  
$
4,078
    
$
235
  

We had temporary differences and net operating loss carry forwards from both our continuing and discontinued operations, which gave rise to deferred tax assets and liabilities at December 31, as follows (in thousands):

Deferred tax assets:
  
2012
    
2011
  
Net operating losses
  
$
4,612
    
$
4,425
  
Environmental and closure reserves
    
4,740
      
5,047
  
Impairment of assets
    
505
      
505
  
Investment
    
(59
)
    
197
  
Other
    
3,798
      
4,513
  
Deferred tax liabilities:
                
Depreciation and amortization
    
(7,875
)
    
(8,936
)
Prepaid expenses
    
(16
)
    
(46
)
 
    
5,705
      
5,705
  
Valuation allowance
    
(5,729
)
    
(6,428
)
Net deferred income tax liabilities
    
(24
)
    
(723
)

An overall reconciliation between the expected tax expense (benefit) using the federal statutory rate of 34% and the provision (benefit) for income taxes from continuing operations as reported in the accompanying consolidated statement of operations is provided below.

 
  
2012
    
2011
    
2010
  
Tax (benefit) expense at statutory rate
  
$
(1,847
)
  
$
3,557
    
$
1,740
  
State tax (benefit) expense, net of federal benefit
    
(131
)
    
53
      
(56
)
Previously unrecorded state tax benefit
    
―
      
―
      
(173
)
Permanent items
    
110
      
150
      
61
  
Other
    
(100
)
    
355
      
(1,325
)
(Decrease) increase in valuation allowance
    
(183
)
    
(37
)
    
(12
)
Income tax (benefit) expense
  
$
(2,151
)
  
$
4,078
    
$
235
  

The provision for income taxes is determined in accordance with ASC 740, "Income Taxes". Deferred income tax assets and liabilities are recognized for future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company regularly assesses the likelihood that the deferred tax asset will be recovered from future taxable income. The Company considers projected future taxable income and ongoing tax planning strategies, then records a valuation allowance to reduce the carrying value of the net deferred income taxes to an amount that is more likely than not to be realized. In 2012, 2011 and 2010, we determined that it was more likely than not that approximately $5,729,000, $6,428,000 and $6,024,000, respectively, of deferred income tax assets would not be realized, and as such, a full valuation allowance was applied against those deferred income tax assets. Our valuation allowance decreased by approximately $183,000, $37,000 and $12,000 for the years ended December 31, 2012, 2011, and 2010, respectively.

We have estimated net operating loss carryforwards (NOLs) for federal and state income tax purposes of approximately $6,091,000 and $46,205,000, respectively, as of December 31, 2012. These net operating losses can be carried forward and applied against future taxable income, if any, and expire in various amounts through 2021. However, as a result of various stock offerings and certain acquisitions, which in the aggregate constitute a change in control, the use of these NOLs will be limited under the provisions of Section 382 of the Internal Revenue Code of 1986, as amended. Additionally, NOLs may be further limited under the provisions of Treasury Regulation 1.1502-21 regarding Separate Return Limitation Years.