XML 42 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
Income Taxes
9 Months Ended
Sep. 30, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company follows ASC Topic 740, Income Taxes (“ASC 740”). Under the asset and liability method of ASC 740, deferred assets and liabilities are recognized for the future costs and benefits attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company periodically reviews the requirements for a valuation allowance and makes adjustments to such allowances when changes in circumstances result in changes in the Company’s judgment about the future realization of deferred tax assets. The Company intends to maintain a valuation allowance until evidence would support the conclusion that it is more likely than not that the deferred tax assets will be realized.
The Company recorded $3.4 million of net tax benefit during the nine months ended September 30, 2014. The benefit was primarily related to the tax impact from the impairment of an indefinite-lived intangible asset and goodwill (see Note 6, Intangible Asset and Goodwill, for further information). Due to the indefinite life of the intangible asset and goodwill for book purposes, the related deferred tax liability cannot serve as a source of taxable income to support deferred tax assets. Therefore, the impairment resulted in a reduction to the deferred tax liability previously recorded to the Consolidated Statements of Operations. In addition, the amount recorded during the nine months ended September 30, 2014 included a non-recurring tax benefit to revalue deferred tax liabilities as a result of the change in the state rate for which deferred taxes are measured.
ASC 740 further establishes guidance on the accounting for uncertain tax positions. As of September 30, 2014, the Company had a liability for uncertain tax positions balance of $0.06 million, of which $0.04 million represented unrecognized tax benefits, which if recognized at some point in the future would favorably impact the effective tax rate, and $0.02 million of interest expense. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for the years before 2005 and state examinations for the years before 2003.