Note 4. Income Taxes

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Text Block]

Note 4. Income Taxes

Avalon recorded net income of $304,000 in the third quarter of 2011 compared with a net loss of $2,000 in the third quarter of 2010. Avalon recorded a state income tax provision in both the third quarter of 2011 and 2010, which was related entirely to the waste management and brokerage operations. Excluding the effect of this state tax provision, Avalon’s overall effective tax rate was 0% in the third quarter of 2011 and 2010. The income tax provision recorded for the third quarter of 2011 and 2010 was offset by a change in the valuation allowance. The overall effective tax rate is different than statutory rates primarily due to a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.

Avalon recorded net income of $41,000 for the first nine months of 2011 compared with a net loss of $.6 million for the first nine months of 2010. Avalon recorded a state income tax provision for the nine months ended September 30, 2011 and a state income tax benefit for the nine months ended 2010, both of which were related entirely to the waste management and brokerage operations. Excluding the effect of the state income tax provision and benefit, Avalon’s overall effective tax rate was 0% in the first nine months of 2011 and 2010. The income tax provision recorded for the first nine months of 2011 and the benefit for the first nine months of 2010 were offset by a change in the valuation allowance. The overall effective tax rate is different than statutory rates primarily due to a change in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.