Note N - Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Text Block]

Note N:                      Income Taxes

The Company’s effective tax rate of 12.5% and 38.0% for the three-month periods ended March 31, 2013 and 2012 differs from the statutory federal tax rate of 34% due primarily to state taxes, non-deductible stock-based compensation, differences between U.S. and foreign tax rates, foreign losses incurred with no related tax benefit, and non-deductible meals and entertainment expenses.  The rate decrease is mainly attributable to the year to date loss combined with the discrete effect of the adjustment to reflect the 2012 federal and state research and development credit allowable due to legislation that was not enacted until after the prior year balance sheet date.

Fuel Tech had unrecognized tax benefits of $42, including penalties and interest, as of March 31, 2013 and December 31, 2012, all of which, if ultimately recognized, would reduce Fuel Tech’s annual effective tax rate.