INCOME TAXES

The following table details the components of the Company's provision (benefit) for income taxes from continuing operations (in thousands):



	Years Ended September 30,
	2012			2011			2010
Current tax provision:
Federal	$	—		$	51		$	1,379
State	959			574			535
Foreign	44			425			—
Total current tax provision	1,003			1,050			1,914
Deferred tax provision (benefit)
Federal	13,787			(4,668		)	(5,795		)
State	(1,278		)	(2,056		)	(223		)
Foreign	—			1,067			1,454
Total deferred tax provision (benefit)	12,509			(5,657		)	(4,564		)
Total income tax provision (benefit)	$	13,512		$	(4,607	)	$	(2,650	)

A reconciliation between the federal statutory income tax rate and the Company's effective income tax rate is as follows:



	Years Ended September 30,
	2012		2011		2010
Statutory tax rate	35	%	35	%	35	%
State and local taxes, net of federal benefit	2		13		12
Deconsolidation adjustment	(6	)	—		—
Return permanent adjustments	—		12		(7	)
Taxable foreign distributions	—		(6	)	—
Valuation allowance for deferred tax assets	2		(4	)	(18	)
Equity-based compensation expense	—		(3	)	(8	)
Other items	1		—		(1	)
	34	%	47	%	13	%

Deferred tax assets (liabilities) are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences will result in taxable or deductible amounts in future years. The components of deferred tax assets, net, are as follows (in thousands):



	September 30,
	2012			2011
Deferred tax assets related to:
Federal, foreign, state and local operating loss carryforwards	$	23,225		$	23,594
Capital loss carryforwards	1,314			24,752
Unrealized loss on investments	8,913			9,830
Provision for credit losses	11,288			4,627
Accrued expenses	2,059			3,685
Employee equity compensation awards	906			1,242
Investments in real estate assets	1,076			41
Property and equipment basis differences	—			681
Gross deferred tax assets	48,781			68,452
Less: valuation allowance	(5,812		)	(4,858		)
	42,969			63,594
Deferred tax liabilities related to:
Investments in partnership interests	(6,001		)	(12,013		)
Deferred income	(2,312		)	—
Property and equipment basis differences	(91		)	—
	(8,404		)	(12,013		)

Deferred tax assets, net	$	34,565		$	51,581

At September 30, 2012, the Company had gross federal ($38.5 million), state and local ($176.1 million) and foreign ($700,000) net operating tax loss carryforwards ("NOLs") of $215.3 million (deferred tax asset of $23.2 million) that will expire between fiscal 2012 and 2032. The Company believes it will be able to utilize up to $112.2 million of these NOLs (tax effected benefit of $18.8 million) prior to their expiration and has changed its valuation allowance against gross NOLs from $80.1 million to $103.1 million (tax effected expense of $1.0 million). In addition, the Company changed its valuation allowance against gross state timing differences of $1.0 million to $2.1 million (tax effected expense of $600,000) that the Company believes it will not be able to use. Management will continue to assess its estimate of the amount of NOLs that the Company will be able to utilize. Furthermore, its estimate of the required valuation allowance could be adjusted in the future if projections of taxable income are revised. Management believes it is more likely than not that the other net deferred tax assets will be realized based on tax planning strategies that will generate future taxable income during the periods in which these temporary differences become deductible.

The Company is subject to examination by the U.S. Internal Revenue Service (“IRS”) and by the taxing authorities in states in which the Company has significant business operations, such as Pennsylvania and New York. The Company is currently undergoing a New York State examination for fiscal 2007 through 2009. The Company is not subject to IRS examination for fiscal years before 2009 and is not subject to state and local income tax examinations for fiscal years before 2006.