INCOME TAXES.

12 Months Ended

Dec. 31, 2011

INCOME TAXES.

INCOME TAXES.

9.INCOME TAXES.

Income taxes (benefits) consist of the following:

	2011			2010		2009
Taxes (benefits) from continuing operations	$	(401,000	)	$	499,625	$	(3,774,810	)
Taxes (benefits) from discontinued operations	—			—		(1,960,648		)
	$	(401,000	)	$	499,625	$	(5,735,458	)

Income taxes (benefits) from continuing operations consist of the following:

	2011			2010			2009
Federal:
Current	$	(91,975	)	$	—		$	(2,312,198	)
Deferred	—			(586,045		)	(1,301,286		)
	(91,975		)	(586,045		)	(3,613,484		)
State:
Current	(309,025		)	86,485			396,900
Deferred	—			999,185			(558,226		)
	(309,025		)	1,085,670			(161,326		)
Total	$	(401,000	)	$	499,625		$	(3,774,810	)

The deferred tax assets and the deferred tax liabilities were as follows:

	2011			2010
Deferred tax assets:
Receivables	$	77,000		$	38,500
Inventories	762,541			1,108,928
Accrued liabilities	1,915,898			2,023,331
Stock-based compensation	—			52,234
Federal and State net operating losses and credit carryforwards	4,233,269			4,349,183
Other	41,983			38,329
Total deferred tax assets	7,030,691			7,610,505
Deferred tax liabilities:
Depreciation	(2,081,866		)	(2,265,086		)
Prepaids and other	(359,649		)	(396,530		)
Total deferred tax liabilities	(2,441,515		)	(2,661,616		)
Net deferred income tax assets (liabilities)	4,589,176			4,948,889
Valuation allowance	(4,589,176		)	(4,948,889		)
	$	—		$	—

The ultimate realization of these deferred tax assets is dependent upon future taxable income.  Because the Company has incurred tax losses for the last three years, there is no certainty that the Company will realize the full benefit of these deferred tax assets.  Accordingly, a valuation allowance aggregating $4,948,889 was established at December 25, 2010, of this amount, $3,833,625 was allocated to continuing operations and $1,115,264 was allocated to discontinued operations. As of December 31, 2011 the valuation allowance is $4,589,176.

At December 31, 2011, the Company has a federal and state tax loss carryforwards of approximately $6.5 million and $22 million, respectively, available to offset future taxable income, expiring in various amounts through December 31, 2031.

A reconciliation of the provision for income taxes from continuing operations to the amount computed by applying the statutory federal income tax rate (34% in 2011, 2010, and 2009) to income before income taxes is as follows:

	2011			2010			2009
Income taxes at statutory rate	$	97,219		$	(2,758,079	)	$	(3,226,640	)
State income taxes, net of federal tax effect	60,704			(227,236		)	(133,034		)
Tax-exempt underwriting income of wholly-owned small captive insurance subsidiary	—			(404,600		)	(404,600		)
Research and development tax credits	(147,617		)	(280,153		)	(327,296		)
Alternative fuel tax credit	(87,166		)	(25,000		)	(22,565		)
Stock-based compensation	(35,685		)	150,668			144,472
Valuation allowance	(359,713		)	3,833,625			—
Other, net	71,258			210,400			194,853
Total	$	(401,000	)	$	499,625		$	(3,774,810	)

Uncertain Tax Positions

The Company recognizes income tax benefits only when it is more likely than not that the tax position will be allowed upon examination by taxing authorities, which is presumed to occur.  The amount of such tax benefit recorded is the largest amount that is more likely than not to be allowed.  A reconciliation of the change in the unrecognized tax benefits for the three years ended December 31, 2011 is as follows:

Unrecognized tax benefits at December 27, 2008	$	675,200
Gross increases - tax positions in prior periods	330,058
Gross increases - tax positions in current period	—
Settlements	—
Lapse of statute of limitations	—
Unrecognized tax benefits at December 26, 2009	1,005,258
Gross increases - tax positions in prior periods	34,796
Gross increases - tax positions in current period	—
Settlements	—
Lapse of statute of limitations	—
Unrecognized tax benefits at December 25, 2010	1,040,054
Gross increases - tax positions in prior periods	80,558
Gross increases - tax positions in current period	—
Settlements	—
Lapse of statute of limitations	(401,000		)
Unrecognized tax benefits at December 31, 2011	$	719,612

The entire balance of approximately $719,612 at December 31, 2011 relates to unrecognized tax positions that, if recognized, would affect the annual effective tax rate.  The Company is subject to U.S. federal income tax as well as various state taxes.  The Company is no longer subject to examination by federal taxing authorities for the fiscal year ended 2006 and earlier.  The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease over the next twelve months.  Interest and penalties related to income tax matters are recognized in income tax expense.  Interest and penalties accrued for, and recognized during, the fiscal years ended 2011, 2010, and 2009 were immaterial.