7. Income taxes

9 Months Ended

Sep. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

7. Income taxes

We recorded an income tax provision for the third quarter of 2013 of $434,000 at an effective tax rate of 23.0%, compared to an income tax provision during the third quarter of 2012 of $13,000 at an effective tax rate of 36.1%.  For the nine months ended September 30, 2013, we recorded an income tax provision of $1,300,000 at an effective tax rate of 25.4%, compared to an income tax provision during the nine months ended September 30, 2012 of $979,000 at an effective tax rate of 36.0%.  Our effective tax rate for the third quarter of 2013 is unusually low due to a $224,000 reduction in tax liabilities for unrecognized tax benefits resulting from the completion of an audit of our 2010 federal income tax return.  Our effective tax rate for the first nine months of 2013 is unusually low because it includes: 1) the previously discussed reduction in tax liabilities for unrecognized tax benefits recorded in the third quarter of 2013 and 2) the benefit from the 2012 federal research and development credit (“R&D credit”) of approximately $220,000 as this credit was not renewed until January 2, 2013 as a component of the American Taxpayer Relief Act of 2012.

We are subject to U.S. federal income tax as well as income tax of certain state and foreign jurisdictions.  We have substantially concluded all U.S. federal income tax, state and local, and foreign tax matters through 2009.  During 2008, a limited scope examination of our 2005 and 2006 federal tax returns was completed and during 2013, an examination of our 2010 federal tax return was completed.   However, our federal tax returns for the years 2010 through 2012 remain open to examination. Various state and foreign tax jurisdiction tax years remain open to examination as well, though we believe that any additional assessment would be immaterial to the Condensed Consolidated Financial Statements.  No state or foreign tax jurisdiction income tax returns are currently under examination. As of September 30, 2013, we had $73,000 of total gross unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.