Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

Income Taxes

5. Income Taxes

The Company had a current state provision for income taxes of $4,000 and $1,000 for the three months ended March 31, 2012 and 2011, respectively.

The Company periodically evaluates the positive and negative evidence bearing upon the realizability of its deferred tax assets. The Company, however, has considered results of operations and concluded that it is more likely than not that the deferred tax assets will not be realizable. As a result, the Company has determined that a valuation allowance of $35.1 million and $35.0 million is required at March 31, 2012, and December 31, 2011, respectively. The increase in valuation allowance is primarily due to an increase in deferred tax assets arising from current year’s net operating losses. The tax effects of temporary differences that gave rise to deferred tax assets as of March 31, 2012, and December 31, 2011, were as follows (in thousands):

	March 31,			December 31,
	2012			2011
Deferred tax assets:
Net operating losses	$	28,387		$	28,196
Capital losses		6,173			6,173
Other asset reserves		2,335			2,335
AMT credit		649			649
Accrued expenses		12			9
Total deferred tax assets		37,556			37,362
Valuation allowance		(35,148	)		(34,968	)
		2,408			2,394
Deferred tax liabilities:
State deferreds		(2,408	)		(2,394	)
Total deferred tax liabilities		(2,408	)		(2,394	)
Net deferred taxes	$	—		$	—

As of December 31, 2011, the Company had federal NOLs of approximately $72.1 million and post-apportionment state NOLs of approximately $41.0 million, respectively. The Company also has pre-apportionment NOLs from New York State and New York City totaling $104 million at December 31, 2011. Since the Company has no revenue-generating operations, the apportionment factor is zero and thus no deferred tax asset is recognized. The NOLs from New York State and New York City carry forward for 20 years (expiring between 2021 and 2031). If the Company were to commence operations in New York State or New York City in future years, the apportionment factor would exceed zero resulting in deferred tax assets for which realization would be assessed.

Because of our current lack of operations, we have established a valuation allowance for the entire amount of federal and state NOLs as it is unlikely that we can realize these deferred tax benefits in the future. Based on such review, the Company does not believe Section 382 of the Internal Revenue Code will adversely impact its ability to use its current net operating losses.

The following is a reconciliation of the statutory federal income tax rate to the actual effective income tax rate for continuing operations:

	March 31,
	2012			2011
Federal tax (benefit) rate		(34.0	)%		(34.0	)%
Increase (decrease) in taxes resulting from:
State income taxes		(5.8	)		(5.8	)
Change in valuation allowance		39.3			40.3
Life insurance		0.3			(0.5	)
Minimum tax		0.8			(0.1	)
		0.6	%		(0.1	)%