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Income Taxes
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9 Months Ended | ||
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Sep. 30, 2013
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| Income Taxes [Abstract] | |||
| Income Taxes |
The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.
We had income tax benefits of $383,000 and $247,000 from continuing operations for the three months ended September 30, 2013 and the corresponding period of 2012, respectively, and income tax benefits of $1,943,000 and $1,102,000 for the nine months ended September 30, 2013 and the corresponding period of 2012, respectively. The Company’s effective tax rates were approximately 40.3% and 33.4% for the three months ended September 30, 2013 and 2012, respectively, and 37.6% and 30.9% for the nine months ended September 30, 2013 and 2012, respectively. We have treated the goodwill impairment loss of approximately $1,149,000 recorded for our CHPRC reporting unit recorded during the second quarter of 2013 as a discrete item and have not included the impact of the impairment in our estimated effective tax rates for the nine months ended September 30, 2013, in accordance with ASC 740-270-30-8 (see Note 6 – “Other Intangible Assets and Goodwill” for further information regarding this goodwill impairment).
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 tax assets to an amount that is more likely than not to be realized.
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