

NOTE 5:	INCOME TAXES

The provision (benefit) for income taxes from continuing operations is comprised of the following:



	Year Ended December 31,
	2013			2012
Current:
Federal	$	(16	)	$	—
State	29			318
	13			318
Deferred:
Federal	(642		)	—
State	(85		)	—
	(727		)	—
Total	$	(714	)	$	318

The tax effect of pretax income or loss from continuing operations generally should be determined by a computation that does not consider the tax effects of items that are not included in continuing operations. An exception to that incremental approach is applied when there is a loss from continuing operations and income in another category of earnings (for example, extraordinary items, discontinued operations, other comprehensive income, additional paid in capital, etc.). In that situation, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. This exception to the general rule applies even when a valuation allowance is in place at the beginning and end of the year. While the intraperiod tax allocation does not change the overall tax provision, it may result in a gross-up of the individual components, thereby changing the amount of tax provision included in each category.

Pursuant to these intraperiod allocation requirements, the Company’s provision for income taxes for the year ended December 31, 2013 has been allocated between continuing, discontinued operations, and other comprehensive income. The Company recorded an income tax benefit of $714 related to continuing operations with offsetting tax expense of $575 and $152 in discontinued operations and other comprehensive income, respectively, for the year ended December 31, 2013. Discontinued operations and other comprehensive income, net of income tax expense, for the year ended December 31, 2013 were $878 and $229, respectively. The effective tax rates for discontinued operations and other comprehensive income were 39.6% and 39.9%, respectively for the year ended December 31, 2013. The total income tax provision did not change, and continues to be impacted by the full valuation allowance on the Company's deferred tax assets.

A reconciliation of the provision for income taxes from continuing operations at the normal statutory federal rate to the provision included in the accompanying consolidated statements of operations is shown below:



	Year Ended December 31,
	2013			2012
“Expected” provision at federal statutory rate	$	(2,282	)	$	680
State income taxes	(705		)	106
Change in valuation allowance	2,222			(447		)
Other	51			(21		)
Provision for income taxes	$	(714	)	$	318
Effective tax rate	11.0		%	16.4		%

The tax effects of temporary differences related to deferred income taxes shown on the consolidated balance sheets are as follows:



	December 31,
	2013			2012
Deferred income tax assets:
Post-retirement liability	$	1,928		$	2,277
Deferred income	1,568			1,651
Stock based compensation	2,106			1,857
Federal operating loss carry-forwards	12,938			11,481
Capital loss carryforward	926			2,243
State tax credits	3,022			3,022
State operating loss carry-forwards	8,277			7,638
Other	4,049			4,626
Less: valuation allowance	(11,275		)	(9,053		)
Gross deferred income tax assets	23,539			25,742
Deferred income tax liabilities:
Fixed assets	(17,919		)	(20,180		)
Equity method investment	(391		)	(526		)
Other	(5,229		)	(5,036		)
Gross deferred income tax liabilities	(23,539		)	(25,742		)
Net deferred income tax liability	$	—		$	—

The Company establishes a valuation allowance against certain deferred income tax assets if management believes, based on its assessment of historical and projected operating results and other available facts and circumstances, that it is more-likely-than-not that all or a portion of the deferred income tax assets will not be realized. Management reassessed the need for a valuation allowance for its deferred income tax assets. It was determined that a valuation allowance was appropriate on its net deferred income tax assets for each year presented.

As of December 31, 2013, the Company had approximately $36,969 and $99,496 of federal and state net operating loss carry-forwards, respectively. The federal net operating loss will expire if not used in varying periods between 2028 and 2031. Due to varying state carry-forward periods, the state net operating losses and credit carryforwards will expire between calendar years 2016 and 2031. The Company has a capital loss carry-forward of $2,318 as of December 31, 2013, of which $1,843 and $475 will expire at the end of calendar years 2016 and 2018, respectively.

The Company has elected to treat interest and penalties related to tax liabilities as a component of income tax expense. During the years ended December 31, 2013 and 2012, the Company’s activity in accrued interest and penalties was not significant.

The following is a reconciliation of the total amount of unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2013 and 2012:



	Years Ended December 31,
	2013		2012
Beginning of year balance	$	445	$	445
Additions for tax positions of prior years	62		—
Additions for tax positions of the current year	59		—
End of year balance	$	566	$	445

For each period presented, the amount of unrecognized benefits (excluding interest and penalties) that would impact the effective tax rate is approximately $29, if recognized.

The Company does not expect a significant change in the amount of unrecognized tax benefits in the next twelve months.

The Company’s federal and state income tax returns for the fiscal years ended June 30, 2010 and forward are open to examination. The amount of income taxes that the Company pays is subject to ongoing audits by federal and state taxing authorities.