(2) Income Taxes (in thousands)

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Text Block]

(2)           Income Taxes (in thousands)

Our income tax is different than the expected amount computed using the applicable federal and state statutory income tax rates.  The reasons for and effects of such differences for the years ended December 31 are below:

	2011			2010
Expected amount	$	19,859		$	12,820
State income taxes, net of federal benefit		2,950			1,808
Other		(1,878	)		(374	)
	$	20,931		$	14,254

The deferred tax assets and liabilities resulting from temporary differences between book and tax basis are comprised of the following at December 31:

	2011			2010
Long-term deferred tax assets:
AMT credit carryforwards	$	1,137		$	1,162
Stock-based compensation		596			113
Investment in Savoy		960			1,575
Oil and gas properties		1,540			873
Net long-term deferred tax assets		4,233			3,723
Long-term deferred tax liabilities:
Coal properties		(35,333	)		(21,158	)
Net deferred tax liability	$	31,100		$	17,435

For financial accounting purposes the 2009 Sunrise Coal buyout was treated as an equity transaction among members of a controlled group.  For income tax purposes we were able to increase our tax basis in the coal properties and will receive future tax deductions; accordingly, a deferred tax asset of $13 million was recognized with the credit recorded directly to additional paid-in capital. Upon further analysis, in preparing the 2010 tax provision we determined that the tax basis of the incremental assets acquired was less than that originally calculated.  As such, in 2010, we reduced our deferred tax assets by $2.37 million with an offset to additional paid-in capital.

We have AMT credit carryforwards of about $1 million.

We have analyzed our filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions.  We identified our federal tax return and our Indiana state tax return as “major” tax jurisdictions.  None of our corporate tax returns have been examined in the last ten years. We were recently advised by the IRS that they will perform an examination of our 2009 and 2010 tax returns; such exam is to commence in mid-March 2012. We were also notified by Indiana tax representatives that they will examine our 2008-2010 tax returns; such exam is to commence this summer. We believe that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our consolidated financial position.  Therefore, no reserves for uncertain income tax positions have been recorded.