12. INCOME TAXES:

The Company’s provision for income taxes from continuing operations was approximately $66.7 million for the year ended December 31, 2011, compared to a provision for income taxes of approximately $4.0 million for the year ended December 31, 2010, and compared to a provision for income taxes of $7.0 million for 2009. A reconciliation of the statutory federal income taxes to the recorded provision for income taxes from continuing operations is as follows:

	For the Years Ended December 31,
	2011		2010			2009
	(In thousands)

Statutory tax (@ 35% rate)	$	27,863	$	(7,858	)	$	(13,905	)
Effect of state taxes, net of federal		4,331		(613	)		(2,267	)
Effect of state rate and tax law changes		750		101			255
Other permanent items		1		77			152
Interest disallowed under Internal Revenue Code 163(i)		8,825		765			—
Effect of equity adjustments including ASC 718		5		45			198
Internal Revenue Code Section 162(m)		2,226		2,504			534
Valuation allowance		14,910		3,171			22,259
Effect of permanent impairment of long-lived assets		4,540		5,735			—
Expiring NOLs and Charitable Carryovers		1,037		454			225
Cancellation of Stock Based Compensation		1,151		(255	)		218
Other		1,047		(155	)		(655	)
Provision for income taxes	$	66,686	$	3,971		$	7,014

The components of the provision for income taxes from continuing operations are as follows:

	For the Years Ended December 31,
	2011		2010		2009
	(In thousands)

Federal:
Current	$	1,980	$	2,199	$	3,834
Deferred		53,113		1,010		5,679
State:
Current		555		461		1,184
Deferred		11,038		301		(3,683	)
Provision for income taxes	$	66,686	$	3,971	$	7,014

For the year ended December 31, 2011, the provision consisted of deferred taxes of approximately $33.2 million related to temporary differences associated with the amortization for tax purposes of indefinite lived intangible assets held by Radio One, approximately $33.8 million related to the partnership interest in TV One, reduced by the deferred tax benefit from the Reach Media impairment of approximately $2.8 million. Current federal taxes consisted of approximately $2.0 million for Reach Media and state taxes of $393,000 for Radio One and $162,000 for Reach Media. For the year ended December 31, 2010, the tax provision consisted of approximately $2.2 million for Reach Media, approximately $2.7 million for the increase in the deferred tax liability (“DTL”) associated with certain indefinite-lived intangibles, $358,000 for state taxes and FIN 48 items, and a tax benefit of approximately $1.3 million for Reach Media purchase price accounting amortization. For the year ended December 31, 2009, the tax provision consisted of approximately $4.5 million for Reach Media, approximately $4.8 million for the increase in the DTL associated with certain indefinite-lived intangibles, and $94,000 for state taxes and FIN 48 items, which were offset by a benefit of approximately $1.4 million for true-up items and a benefit of approximately $1.0 million for Reach Media purchase price accounting amortization. The decrease of approximately $3.0 million consisted primarily of approximately $2.3 million decrease for Reach Media due to a decline in book income. The Company continues to maintain a full valuation allowance for its deferred tax assets (“DTAs”) other than DTAs for Reach Media as further discussed below.

The loss from discontinued operations for the years ended December 31, 2011, 2010 and 2009 did not result in any tax benefit due to the Company’s valuation allowance.

The significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows:

	As of December 31,
	2011			2010
	(In thousands)

Deferred tax assets:
Allowance for doubtful accounts	$	1,130		$	1,180
Accruals		512			1,455
Total current deferred tax assets before valuation allowance		1,642			2,635
Valuation allowance		(1,584	)		(2,456	)
Total current deferred tax assets, net		58			179
Intangible assets		16,528			21,252
Fixed assets		1,459			299
Stock-based compensation		1,474			1,803

Net operating loss carryforwards		249,059			208,805
Other		1,451			2,336
Total noncurrent deferred tax assets before valuation allowance		269,971			234,495
Valuation allowance		(243,343	)		(227,903	)
Net noncurrent deferred tax assets		26,628			6,592
Total deferred tax assets	$	26,686		$	6,771

Deferred tax liabilities:
Prepaid expenses		—			(157	)
Total current deferred tax liability		—			(157	)
Intangible assets		(117,616	)		(87,400	)
Partnership interests		(61,728	)		(7,956	)
Other		(863	)		(628	)
Total noncurrent deferred tax liabilities		(180,207	)		(95,984	)
Total deferred tax liabilities		(180,207	)		(96,141	)
Net deferred tax liabilities	$	(153,521	)	$	(89,370	)

As of December 31, 2011, the Company had Federal, state, and city NOL carryforward amounts of approximately $626.6 million, $572.5 million, and $127.8 million respectively. The state and city NOLs are applied separately from the Federal NOL as the Company generally files separate state and city returns for each subsidiary. Additionally, the amount of the state NOLs can change whenever future state apportionment factors differ from current factors. The NOLs may be subject to limitation under Internal Revenue Code Section 382. The NOLs begin to expire as early as 2017, with the final expirations in 2031.

Deferred income taxes reflect the impact of temporary differences between the assets and liabilities recognized for financial reporting purposes and amounts recognized for tax purposes. Deferred taxes are based on tax laws as currently enacted.

The Company had unrecognized tax benefits of approximately $5.8 million related to state NOLs of approximately $56.6 million as of December 31, 2011.

The Company concluded it was more likely than not that the benefit from certain of its DTAs would not be realized. The Company considered its historically profitable jurisdictions, its sources of future taxable income and tax planning strategies in determining the amount of valuation allowance recorded. As part of that assessment, the Company also determined that it was not appropriate under generally accepted accounting principles to benefit its DTAs based on DTLs related to indefinite-lived intangibles that cannot be scheduled to reverse in the same period. Because the DTL in this case would not reverse until some future indefinite period when the intangibles are either sold or impaired, any resulting temporary differences cannot be considered a source of future taxable income to support realization of the DTAs. As a result of the assessment, and given the current total three year cumulative loss position, (after excluding the gain recognized in connection with the consolidation of TV One) the uncertainty of future taxable income and the feasibility of tax planning strategies, the Company recorded a valuation allowance of approximately $244.9 million, $230.4 million and $228.0 million as of December 31, 2011, 2010 and 2009, respectively.

As disclosed in Note 1 — Organization and Summary of Significant Accounting Policies, the Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” The nature of the uncertainties pertaining to the Company’s income taxes is primarily due to various state tax positions. As of December 31, 2011, the Company had unrecognized tax benefits of approximately $5.8 million, of which a net amount of approximately $3.8 million, if recognized, would impact the effective tax rate if there was no valuation allowance. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. Accordingly, during the year ended December 31, 2011, we recorded interest related to unrecognized tax benefits of $46,000, and at December 31, 2011, we recorded a liability for accrued interest of $311,000. The Company estimates the possible change to its unrecognized tax benefits prior to December 31, 2012 would be up to $752,000, due to closed statutes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2011			2010			2009
	(In thousands)

Balance as of January 1	$	5,822		$	6,326		$	4,953
Additions (reductions) for tax position related to current year		-			(475	)		82
Additions for tax positions related to prior years		-			-			1,525
Reductions for tax positions as a result of the lapse of applicable statutes of limitations		(42	)		(29	)		(234	)
Balance as of December 31	$	5,780		$	5,822		$	6,326

As of December 31, 2011, the Company was not under audit in any jurisdiction for Federal or state income tax purposes. However, the Company’s open tax years for Federal income tax examinations include the tax years ended December 31, 2008 through 2011. Additionally, prior years are open to the extent of the amount of the net operating loss from that year. For state and local purposes, the open years for tax examinations include the tax years ended December 31, 2007 through 2011.