Income Taxes

The components of the income tax provision (benefit) are as follows:



	2011		2010		2009
Federal - current	$	—	$	—	$	(1,461	)
State and local - current	123		225		45
	$	123	$	225	$	(1,416	)

The following reconciles the “statutory” federal income tax rate to the effective income tax rate:



	2011		2010		2009
Computed "expected" income tax (benefit) expense	(35	)%	35	%	(35	)%
Reduction (increase) in income tax benefit and increase (reduction) in income tax expense resulting from:
State tax, net of federal benefit	2		9		2
Change in federal valuation allowance	33		(33	)	(70	)
Other	4		3		—
Effective income tax rate	4	%	14	%	(103	)%

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2011 and 2010 are as follows:



	2011			2010
Deferred tax assets:
Receivable allowance	$	204		$	356
Goodwill	8,630			10,860
Intangible assets	1,684			2,013
Capital loss	2,019			2,027
Compensation expense	1,537			1,574
Federal net operating loss carryforward	33,882			29,651
State net operating loss carryforward	4,204			3,678
Legal settlement	20			48
AMT credit carry forward	157			157
Accrued expenses	92			155
Deferred rent	212			221
Other	42			191
Gross deferred tax assets	$	52,683		$	50,931
Valuation allowance	(51,790		)	(50,534		)
	$	893		$	397
Deferred tax liabilities:
Accumulated depreciation	(893		)	(397		)
Gross deferred tax liabilities	(893		)	(397		)
Net deferred tax assets	$	—		$	—

The Company has significant deferred tax assets attributable to tax deductible intangibles, capital loss carryforwards, and federal and state net operating loss carryforwards, which may reduce taxable income in future periods. Based on the continued decline in revenues, the cumulative tax and operating losses, the lack of taxes in the carryback period, and the uncertainty surrounding the extent or timing of future taxable income, the Company does not believe it will realize the tax benefits of its deferred tax assets. Accordingly, the Company continues to record a full valuation allowance on its net deferred tax assets of $51.8 million and $50.5 million as of December 31, 2011 and 2010, respectively.

Prior to the passage of the Worker, Homeownership and Business Assistance Act of 2009 (the "2009 Act"), signed into law in the fourth quarter of 2009, corporations were allowed to carryback net operating losses two years and forward 20 years to offset taxable income. Under the 2009 Act, corporations can elect to carryback net operating losses incurred in either 2008 or 2009 to a profitable fifth year preceding the loss year. The net operating loss carried back was limited to 50% of the available taxable income for that year. In the fourth quarter of 2009, the Company filed an amended tax return to recover approximately $1.5 million of federal income tax previously paid. In February 2010, the Company received $1.5 million of cash related to the carryback claim, which included $0.02 million of interest.

There was no federal tax expense recorded in the year ended December 31, 2011. The income tax expense recorded is primarily due to taxes on gross revenues related to two states, a liability, including interest, for amended tax returns for one of these states for the years 2006 through 2008 and the true-up of the 2010 tax provision for two states. There was no federal tax expense / benefit recorded in the year ended December 31, 2010, and the income tax expense recorded, including interest, is primarily due to a liability for amended tax returns filed in one state for tax years 2007 and 2008, and the true-up of the 2009 tax provision for this state. The federal tax benefit recorded in the year ended December 31, 2009 reflects the utilization of fully reserved net operating losses that were carried back to 2003 under the 2009 Act referred to above, offset by certain state tax liabilities.

As of December 31, 2011, no amounts were recorded for uncertain tax positions or for the payment of interest or penalties.

In July 2008, the Company received notification from the U.S. Internal Revenue Service (the “IRS”) that it had completed its audits of the Company’s tax returns for the years 2001 through 2006 with no adjustments. State income tax returns for the year 2007 and forward are subject to examination.

As of December 31, 2011, the Company had U.S. federal and state net operating loss carryforwards of approximately $96.8 million and $96.0 million, respectively. The net operating loss carryforwards, if not utilized, will expire in the years 2012 through 2031.