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Income Taxes
6 Months Ended
Jun. 30, 2012
Income Taxes

12. Income Taxes

The Company had $1.7 million of total unrecognized tax benefits as of June 30, 2012 and December 31, 2011.The Company recognizes interest and/or penalties related to income tax matters in income tax expense. The Company has not accrued interest expense with respect to this unrecognized tax benefit at June 30, 2012 and December 31, 2011.

At June 30, 2012, the Company had a federal net operating loss carryforward of $93.6 million and a state net operating loss carryforward of $614.2 million. At December 31, 2011, the Company had a federal net operating loss carryforward of $92.0 million and a state net operating loss carryforward of $612.6 million. These net operating losses are available to offset future taxable income through 2031.

In general, a valuation allowance is recorded if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from loss carryforwards. Based on the timing of reversal of future taxable amounts and the Company’s recent history of losses and future expectations of reporting taxable losses, management does not believe it met the requirements to realize the benefits of certain of its deferred tax assets and has increased the valuation allowance by $0.7 million. The valuation allowance balance was $96.1 million at June 30, 2012 and $95.5 million at December 31, 2011.

 

In 2011, the Company recorded a valuation allowance to offset the deferred tax component recognized in Accumulated other comprehensive loss. In the six months ended June 30, 2012, this valuation allowance was decreased by $0.1 million from $3.8 million at December 31, 2011 to $3.7 million as June 30, 2012.