Income Taxes:

12 Months Ended

Dec. 31, 2011

Income Taxes: [Abstract]

Income Taxes:

Note 8. Income Taxes:

PMC Commercial has elected to be taxed as a REIT under the Code. To qualify as a REIT, PMC Commercial must meet a number of organizational and operational requirements, including a requirement that we distribute at least 90% of our taxable income to our shareholders. As a REIT, PMC Commercial generally will not be subject to corporate level Federal income tax on net income that is currently distributed to shareholders.

The following reconciles net income to REIT taxable income:

		September 30,			September 30,			September 30,
	Years Ended December 31,
	2011			2010			2009
	(In thousands)
Net income	$	3,647		$	4,297		$	6,761
Book/tax differences:
Gains related to real estate		(235	)		387			(1,110	)
Strategic alternatives		678			—			—
Impairment losses		804			317			—
Severance payments		(100	)		(33	)		(1,435	)
Amortization and accretion		(68	)		(102	)		(232	)
Loan valuation		184			(241	)		497
Other, net		8			(174	)		(306	)
Subtotal		4,918			4,451			4,175
Adjustment for TRS net loss (income), net of tax		(131	)		340			413
Dividend distribution from TRS		1,000			300			—
REIT taxable income	$	5,787		$	5,091		$	4,588
Distributions declared	$	6,767		$	6,757		$	7,445
Basic weighted average common shares outstanding		10,570			10,554			10,573

Dividends per share for dividend reporting purposes were as follows:

		September 30,		September 30,			September 30,		September 30,			September 30,		September 30,
	Years Ended December 31,
	2011					2010					2009
	Amount					Amount					Amount
	Per Share		Percent			Per Share		Percent			Per Share		Percent
Non-qualified dividends	$	0.477		74.53	%	$	0.568		88.75	%	$	0.705		100.00	%
Qualified dividends		0.095		14.78	%		0.028		4.37	%		—		—
Non-taxable return of capital		0.068		10.69	%		0.044		6.88	%		—		—
	$	0.640		100.00	%	$	0.640		100.00	%	$	0.705		100.00	%

In order to meet our taxable income distribution requirements, we may make an election under the Code to treat a portion of the distributions declared and paid in the current year as distributions of the prior year’s taxable income.

PMC Commercial has wholly-owned TRS’s which are subject to Federal income taxes. The income generated from the TRS’s is taxed at normal corporate rates.

We calculate our current and deferred tax provisions based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on the final tax returns are generally recorded in the period when the returns are filed.

Income tax provision (benefit) related to the TRS’s consisted of the following:

		September 30,			September 30,			September 30,
	Years Ended December 31,
	2011			2010			2009
	(In thousands)
Federal:
Current provision	$	483		$	514		$	89
Deferred benefit		(369	)		(645	)		(256	)
Income tax provision (benefit)	$	114		$	(131	)	$	(167	)

The provision (benefit) for income taxes results in effective tax rates that differ from Federal statutory rates of 34%. The reconciliation of TRS income tax attributable to net income (loss) computed at Federal statutory rates to income tax provision (benefit) was as follows:

		September 30,		September 30,			September 30,
	Years Ended December 31,
	2011		2010			2009
	(In thousands)
Income (loss) before income taxes for TRS’s	$	245	$	(471	)	$	(580	)
Expected Federal income tax provision (benefit)	$	83	$	(160	)	$	(198	)
Preferred dividend of subsidiary		31		31			31
Other adjustments		—		(2	)		—
Income tax provision (benefit)	$	114	$	(131	)	$	(167	)

We have identified our Federal tax returns and our state returns in Texas as “major” tax jurisdictions. The periods subject to examination for our Federal tax returns and state returns in Texas are the 2008 through 2010 tax years. We believe that all income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to our financial position. Therefore, no reserves for uncertain tax positions have been recorded.

The components of our net deferred tax asset were as follows:

		September 30,		September 30,
	December 31,
	2011		2010
	(In thousands)
Deferred tax assets:
Secured borrowings—government guaranteed loans	$	814	$	489
Retained interests in transferred assets		364		315
Servicing asset		225		164
Net operating losses		25		28
Loans receivable		—		42
Other		38		3
Total gross deferred tax assets		1,466		1,041
Deferred tax liabilities:
Loans receivable		56		—
Discount on debentures payable		1		2
Total gross deferred tax liabilities		57		2
Deferred tax asset, net	$	1,409	$	1,039

The net operating loss carryforwards at December 31, 2011 were generated by a TRS and are available to offset future taxable income of this TRS. The net operating loss carryforwards expire from 2027 to 2030.

We paid $612,000, $538,000 and $109,000 in income taxes during 2011, 2010 and 2009, respectively.