Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

G. Income Taxes

The provision for income taxes consists of the following:

	Year Ended December 31,
	2011			2010			2009
Current:
Federal	$	789		$	76		$	—
State		1,133			444			764
		1,922			520			764
Deferred:
Federal		3,994			2,816			1,699
State		(288	)		(52	)		(232	)
		3,706			2,764			1,467
Total	$	5,628		$	3,284		$	2,231

At December 31, 2011 and 2010, the components of the net deferred tax liability were as follows:

	2011			2010
Deferred tax assets:
Allowance for credit losses	$	5,272		$	5,253
Depreciation and amortization		24,312			19,709
Federal alternative minimum tax credit		234			884
Federal NOL carryforward		—			4,580
State NOL and other state attributes		469			3,524
State valuation allowance		(369	)		(384	)
Total deferred tax assets		29,918			33,566
Deferred tax liabilities:
Lease receivable and unearned income		(31,686	)		(32,206	)
Residual value		(9,315	)		(8,733	)
Initial direct costs		(250	)		(254	)
Total deferred tax liabilities		(41,251	)		(41,193	)
Net deferred tax liability	$	(11,333	)	$	(7,627	)

At December 31, 2011, we had no federal net operating loss carry-forwards to be used to offset future income. At December 31, 2011, we had state net operating loss carry-forwards of $6.8 million which may be used to offset future income. The state NOL’s have restrictions and expire in approximately one to twenty years. We recorded a valuation allowance against some of our state net operating losses as it is unlikely that these deferred tax assets will be fully realized.

The following is reconciliation between the effective income tax rate and the applicable statutory federal income tax rate:

	Year Ended December 31,
	2011			2010			2009
Federal statutory rate		35.00	%		35.00	%		35.00	%
State income taxes, net of federal benefit		3.03			7.10			7.43
State valuation allowance		(0.07	)		(4.27	)		(3.48	)
Reversal of state income tax reserve		—			—			(4.33	)
Nondeductible expenses and other		0.54			0.44			0.47
Effective income tax rate		38.50	%		38.27	%		35.09	%

The calculation of our tax liabilities involves dealing with estimates in the application of complex tax regulations in a multitude of jurisdictions. We record liabilities for estimated tax obligations for federal and state purposes. For the years ended December 31, 2011, 2010 and 2009, the nondeductible expenses and other tax rate of 0.54%, 0.44% and 0.47% respectively, includes certain non-deductible stock-based compensation.

Uncertain Tax Positions

As of December 31, 2011, we had a liability of $17,000 and a liability of $4,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $10,000 would impact our effective tax rate after a $4,000 federal tax benefit for state income taxes. As of December 31, 2010, we had a liability of $15,000 and a liability of $6,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $14,000 would impact our effective tax rate after a $7,000 federal tax benefit for state income taxes. As of December 31, 2009 we had a liability of $32,000 and a liability of $8,000 for accrued interest and penalties, respectively, related to various state income tax matters. Of these amounts, approximately $26,000 would impact our effective tax rate after a $14,000 federal tax benefit for state income taxes. It is reasonably possible that the total amount of unrecognized tax benefits may change significantly within the next 12 months; however at this time we are unable to estimate the change.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at January 1, 2009	$	445
Additions for tax positions related to current year		40
Reductions for tax positions as a result of:		—
Lapse of statute of limitations		(445	)
Balance at December 31, 2009		40
Additions for tax positions related to current year		—
Reductions for tax positions as a result of:		—
Lapse of statute of limitations		(19	)
Balance at December 31, 2010	$	21
Additions for tax positions related to current year		21
Reductions for tax positions as a result of:		—
Closed examinations		(21	)
Balance at December 31, 2011	$	21

Our federal income tax returns are subject to examination for tax years ended on or after December 31, 2008 and our state income tax returns are subject to examination for tax years ended on or after December 31, 2007.