Note 11 - Income Taxes

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Text Block]

11. Income Taxes – We recorded $51,000 and $99,000, in the three and nine month periods ended September 30, 2011, respectively, for state income tax expense, which includes $27,000 in the year-to-date period in connection with uncertain tax positions.

We have recognized tax benefits from all tax positions taken, and there has been no adjustment to any carry forwards, net operating loss or R&D credits in the past two years.  As of September 30, 2011, the company has recorded a liability of $122,000 in connection with unrecognized tax benefits related to uncertain tax positions.  The liability includes $20,000 of interest and penalties. As of December 31, 2010, the company had recorded a liability of $90,000 in connection with unrecognized tax benefits, which included $15,000 of interest and penalties.  As of September 30, 2011, management expects some incremental but not significant changes in the balance of unrecognized tax benefits over the next twelve months.

Our policy is to recognize accrued interest related to uncertain tax positions in interest expense and related penalties, if applicable, in general and administrative expense.  During the nine months ended September 30, 2011, we recognized $5,000 in interest expense and $0 in penalties related to uncertain tax positions.  During the three and nine months ended September 30, 2010, we recognized $0 and $4,000 in interest expense and $0 and $5,000, respectively in penalties related to the uncertain tax positions.

We file a consolidated U.S. federal income tax return for all subsidiaries in which our ownership exceeds 80 percent, as well as individual subsidiary returns in various states and foreign jurisdictions. For periods prior to April 15, 2008, our VISaer subsidiary filed a separate U.S. federal income tax return.  With few exceptions we are no longer subject to U.S. federal, state and local or foreign income tax examinations by taxing authorities for years before 2007.