Note 7. Income taxes

9 Months Ended

12 Months Ended

Sep. 30, 2013

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income taxes

During the three and nine-month periods ended September 30, 2013, the Company recorded income tax expense of $72,294 and $475,294, respectively.  During the three and nine-month periods ended September 30, 2012, the Company recorded income tax expense of $137,000 and $123,500, respectively.   As of September 30, 2013, the Company has recorded a short-term deferred tax asset of $264,000 and a deferred tax liability of $2,201,150, primarily resulting from deferred tax liabilities assumed from the Acquisition.

At December 31, 2011, we had a Federal net operating loss carry forward of approximately $6,000 which was fully utilized in the year end December 31, 2012.

The provision (benefit) for income taxes consisted of the following components for the years ended December 31:

	2012			2011
Current:
Federal	$	221,000		$	—
State		39,000			—
Total Current		260,000			—
Deferred:
Federal		(8,000	)		105,000
State		(1,000	)		19,000
Total Deferred		(9,000	)		124,000
Valuation Allowance		—			(102,200	)
Total provision (benefit) for income taxes	$	251,000		$	21,800

Reconciliation between the statutory rate and the effective tax rate is as follows at December 31:

	2012			2011
Federal statutory tax rate		34.0	%		34.0	%
State tax rate		6.0	%		6.0	%
Permanent difference		5.6	%		7.1	%
Other		(0.5	)%		0.4	%
		45.1	%		47.5	%
Change in valuation allowance		—			(39.1	%)
Total		45.1	%		(8.4	%)

Components of net deferred income tax assets, including a valuation allowance, are as follows at December 31:

	2012			2011
Current:
Net operating loss carryforward	$	—		$	2,000
Deferred revenue		45,000			71,000
Allowance for doubtful accounts		47,000			50,000
Charitable contributions		—			4,000
Accrued litigation expenses		—			52,000
Stock Options		(28,000	)		—
Prepaid Expenses		(15,000	)		(44,000
Total current deferred income tax assets		49,000			135,000
Noncurrent:
Stock options		135,000			29,000
Basis difference in intangible assets		46,000			56,000
Basis difference in fixed assets		(22,000	)		(21,000	)
Total noncurrent deferred income tax assets		159,000			64,000
Total net deferred income tax assets	$	208,000		$	199,000

The company had no valuation allowance for deferred tax assets as of December 31, 2012 or 2011. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.

The Company has reviewed its tax positions and has determined that it has no significant uncertain positions as of December 31, 2012 or 2011.