Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

Income Taxes

4. Income Taxes

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

	Three Months Ended March 31,
	2012			2011
Current:
Federal	$	7		$	5
State and local		17			36
Total Current		24			41
Deferred:
Federal	$	—		$	—
State and local		—			—
Total Deferred		—			—
Income tax expense	$	24		$	41
Effective income tax rate		0.6	%		2.0	%

Our effective tax rate for the three-month period ended March 31, 2012 was impacted by a full valuation allowance against all of our deferred tax assets, net of deferred tax liabilities.

As of March 31, 2012 and December 31, 2011, deferred tax assets net of deferred tax liabilities totaled $22.0 million and $23.4 million, respectively, offset by full valuation allowances. The gross deferred tax asset and the associated valuation allowance were both reduced by $1.4 million to reflect the utilization of net operating loss carryforwards based on our profit in the first quarter of 2012. Because it is not more-likely-than-not that we will realize our deferred tax assets, we did not record the related tax benefits in the United States and state jurisdictions during the three months ended March 31, 2012. Income tax expense for the three-month periods ended March 31, 2012 and 2011 includes interest on unrecognized tax benefits and state taxes in certain jurisdictions.

During the three-month period ended March 31, 2012, there were no significant changes 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 March 31, 2012 and December 31, 2011 was $610,000 and $614,000, 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 March 2012, the Internal Revenue Service began an audit of the 2010 tax year. Based on the early status of the audit and the protocol of finalizing audits by the relevant authority, it is not possible to estimate the impact of the changes, if any, to the previously recorded liability for unrecognized tax benefits.