Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

5. Income Taxes

The following table presents the components of our income tax expense for the following periods (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Current:
Federal	$	7		$	6		$	18		$	(323	)
State and local		25			24			131			80
Total Current		32			30			149			(243	)
Deferred:
Federal	$	—		$	8		$	—		$	330
State and local		—			1			—			47
Total Deferred		—			9			—			377
Income tax expense	$	32		$	39		$	149		$	134
Effective income tax rate		0.9	%		0.5	%		3.4	%		1.0	%

Our effective tax rate for the three and nine month periods ended September 30, 2011 is impacted by a full valuation allowance against all of our deferred tax assets, net of deferred tax liabilities.

As of September 30, 2011 and December 31, 2010, deferred tax assets net of deferred tax liabilities totaled $24.2 million and $21.1 million, respectively, offset by full valuation allowances. We increased both the gross deferred tax asset and the associated valuation allowance by $3.1 million as a result of the increase of net operating loss carryforward based on our loss in the first nine months of 2011. Because it is not more-likely-than-not that we will realize our deferred tax assets, we have not recorded tax benefits in the United States and state jurisdictions during 2011. Income tax expense for the nine month periods ended September 30, 2011 and 2010 includes interest on unrecognized tax benefits and state taxes in certain jurisdictions.

During the three and nine month periods ended September 30, 2011, there was a $49,000 change to the liability for unrecognized tax benefits or potential interest and penalties recorded as a component of income tax. The total amount of unrecognized tax benefits at each of September 30, 2011 and December 31, 2010 was approximately $588,000 and $539,000, respectively. It is reasonably possible that the amount of the total unrecognized tax benefits may change in the next 12 months. However, we do not believe that any anticipated change will be material to the Condensed Consolidated Financial Statements. In January 2011, the Internal Revenue Service initiated a review of our 2009 corporate income tax return. After an initial review, the Internal Revenue Service has recommended to the Joint Committee on Taxation that the return be accepted as filed.