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Income Taxes (Tables)
 9 Months Ended
Sep. 30, 2014
Income Taxes [Abstract]  
Components of income tax expense (benefit)
The components of income tax expense (benefit) are as follows:

(in thousands)
 
Three Months Ended September 30,
  
Nine Months Ended September 30,
 
  
2014
  
2013
  
2014
  
2013
 
Federal – current
 
$
250
  
$
237
  
$
731
  
$
509
 
State – current
  
387
   
429
   
1,211
   
969
 
Total current
  
637
   
666
   
1,942
   
1,478
 
                 
Federal – deferred
  
(460
)
)
  
(291
)
)
  
(1,422
)
)
  
(742
)
)
State - deferred
  
-
   
-
   
-
   
-
 
Change in valuation allowance
  
460
   
291
   
1,422
   
742
 
Total deferred
  
-
   
-
   
-
   
-
 
                 
Income tax expense (benefit)
 
$
637
  
$
666
  
$
1,942
  
$
1,478
 
Income tax reconciliation
The components of pretax income (loss) and the difference between income taxes computed at the statutory federal rate and the provision for income taxes are as follows:

(in thousands)
 
Three Months Ended September 30,
  
Nine Months Ended September 30,
 
  
2014
  
2013
  
2014
  
2013
 
Income (loss) before income taxes
 
$
(1,315
)
 
$
(832
)
 
$
(4,062
)
 
$
(2,120
)
Tax expense (benefit):
                
Tax at statutory federal rate
 
$
(460
)
 
$
(291
)
 
$
(1,422
)
 
$
(742
)
State income taxes
  
30
   
64
   
140
   
192
 
Federal interest
  
250
   
237
   
731
   
509
 
State interest
  
357
   
365
   
1,071
   
777
 
Permanent items
  
-
   
-
   
-
   
-
 
Other
  
-
   
-
   
-
   
-
 
Change in valuation allowance
  
460
   
291
   
1,422
   
742
 
                 
Income tax expense (benefit)
 
$
637
  
$
666
  
$
1,942
  
$
1,478
 

A reconciliation of the United States federal statutory rate to the Company's effective income tax rate is as follows:

  
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
  
2014
  
2013
   
2014
  
2013
 
Tax at statutory federal rate
 
35.0%
  
35.0%
   
35.0%
  
35.0%
 
State income taxes
 
(2.3)%
  
(7.7)%
   
(3.5)%
  
(9.0)%
 
Federal interest
 
(19.0)%
  
(28.4)%
   
(18.0)%
  
(24.0)%
 
State interest
 
(27.2)%
  
(43.9)%
   
(26.3)%
  
(36.7)%
 
Permanent differences, tax credits and other adjustments
 
-
  
-
   
-
  
-
 
Other
 
-
  
-
   
-
  
-
 
Change in valuation allowance
 
(35.0)%
  
(35.0)%
   
(35.0)%
)
 
(35.0)%
 
Effective income tax rate
 
(48.5)%
  
(80.0)%
   
(47.8)%
  
(69.7)%
 
Net deferred tax asset
The Carteret Tax Basis and federal NOL carryforward deductions utilized as part of the Company's 2012 federal income tax return as filed were as follows:

 
(in thousands)
  
Carteret Tax Basis
 
$
152,000
 
Federal NOL carryforwards utilized
 
$
25,000
 
Calculation of net federal uncertain tax position reserve
A roll forward of the uncertain tax positions reserve, excluding accrued federal and state interest is as follows:

 
(in thousands)
 
September 30, 2014
  
December 31, 2013
 
Uncertain tax position reserve excluding accrued interest, at beginning of period
 
$
34,157
  
$
34,157
 
Federal uncertain tax position reserve excluding accrued interest
  
-
   
-
 
State uncertain tax position reserve excluding accrued interest
  
-
   
-
 
Uncertain tax position reserve excluding accrued interest, at end of period
 
$
34,157
  
$
34,157
 

The interest expense related to the uncertain tax positions is as follows:

(in thousands)
 
Three Months Ended
  
Nine Months Ended
 
  
September 30, 2014
  
September 30, 2013
  
September 30, 2014
  
September 30, 2013
 
Federal
 
$
250
  
$
237
  
$
731
  
$
509
 
State jurisdictions
  
357
   
365
   
1,071
   
777
 
                 
Interest expense - taxes
 
$
607
  
$
602
  
$
1,802
  
$
1,286
 
Uncertain tax positions tax reserve
The Company's uncertain tax positions tax reserve, including accrued interest is as follows:

 
(in thousands)
 
September 30, 2014
  
December 31, 2013
 
Federal uncertain tax positions reserve, including accrued federal interest
 
$
19,910
  
$
19,179
 
State uncertain tax positions reserve, including accrued state interest
  
17,937
   
16,866
 
Total uncertain tax positions reserve, including accrued federal and state interest
 
$
37,847
  
$
36,045
 
Interest expense related to the uncertain tax positions
The interest expense related to the uncertain tax positions is as follows:

(in thousands)
 
Three Months Ended
  
Nine Months Ended
 
  
September 30, 2014
  
September 30, 2013
  
September 30, 2014
  
September 30, 2013
 
Federal
 
$
250
  
$
237
  
$
731
  
$
509
 
State jurisdictions
  
357
   
365
   
1,071
   
777
 
                 
Interest expense - taxes
 
$
607
  
$
602
  
$
1,802
  
$
1,286
 
Federal net operating loss carryforwards
The federal NOL carryforwards as of September 30, 2014 are as follows:

Tax Year Originating
Tax Year Expiring
 
Amount
 
    
2013
2033
 
$
3,700,000
 
2014
2034
  
4,200,000
 
    
$
7,900,000
 
State net operating loss carryforwards
The state NOL carryforwards as of September 30, 2014 are as follows:

Tax Year Originating
Tax Year Expiring
 
Amount
 
    
2011
2031
 
$
1,900,000
 
2013
2033
  
2,700,000
 
2014
2034
  
4,000,000
 
    
$
8,600,000
 
Calculation of net deferred tax assets from NOL carryforwards
The Company has calculated a net deferred tax asset arising primarily from NOL carryforwards as follows:

  
September 30, 2014
  
December 31, 2013
 
Net deferred tax asset
 
$
2,800,000
  
$
1,400,000
 
Valuation allowance
  
(2,800,000
)
  
(1,400,000
)
Net deferred tax asset recognized
 
$
-
  
$
-
 
Indemnification asset
The Company's indemnification asset which reflects the potential amounts reimbursable pursuant to the tax gross-up provision of the Settlement Agreement for the federal uncertain tax position reserve recognized, is as follows:

 
(in thousands)
 
September 30, 2014
  
December 31, 2013
 
Indemnification asset – federal tax gross-up
 
$
18,429
  
$
18,429