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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2012
Components of Income Tax Expense | The components of income tax expense from our wholly-owned operations and investments and our controlling interest in joint ventures with Carrier are as follows:
Years Ended December 31, |  | 2012 |  |  | 2011 |  |  | 2010 |
U.S. Federal |  | $ | 50,919 |  |  | $ | 50,197 |  |  | $ | 44,845 |
State |  |  | 6,245 |  |  |  | 6,338 |  |  |  | 5,515 |
Foreign |  |  | 5,478 |  |  |  | 315 |  |  |  | — |
|  | $ | 62,642 |  |  | $ | 56,850 |  |  | $ | 50,360 |
Current |  | $ | 55,918 |  |  | $ | 48,540 |  |  | $ | 37,635 |
Deferred |  |  | 6,724 |  |  |  | 8,310 |  |  |  | 12,725 |
|  | $ | 62,642 |  |  | $ | 56,850 |  |  | $ | 50,360 |
Reconciliation of Effective Income Tax Rate | Following is a reconciliation of the effective income tax rate:
Years Ended December 31, |  | 2012 |  |  | 2011 |  |  | 2010 |
U.S. federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit and other |  |  | 2.5 |  |  |  | 3.1 |  |  |  | 3.0 |
Tax effects on foreign income |  |  | (0.8 | ) |  |  | (0.1 | ) |  |  | — |
Effective income tax rate attributable to Watsco, Inc. |  |  | 36.7 |  |  |  | 38.0 |  |  |  | 38.0 |
Taxes attributable to noncontrolling interest |  |  | (8.3 | ) |  |  | (8.8 | ) |  |  | (6.9 | )
Effective income tax rate |  |  | 28.4 | % |  |  | 29.2 | % |  |  | 31.1 | %
Significant Components of Current and Long-Term Deferred Tax Assets and Liabilities | The following is a summary of the significant components of our current and long-term deferred tax assets and liabilities:
December 31, |  | 2012 |  |  | 2011 |
Current deferred tax assets: |  |  |  |  |  |  |  |
Capitalized inventory costs and inventory reserves |  | $ | 2,386 |  |  | $ | 2,966 |
Allowance for doubtful accounts |  |  | 1,084 |  |  |  | 1,634 |
Other current deferred tax assets |  |  | 1,215 |  |  |  | 979 |
Self-insurance reserves |  |  | 1,039 |  |  |  | 769 |
Total current deferred tax assets (1) |  |  | 5,724 |  |  |  | 6,348 |
Long-term deferred tax assets: |  |  |  |  |  |  |  |
Share-based compensation |  |  | 13,911 |  |  |  | 11,688 |
Other long-term deferred tax assets |  |  | 797 |  |  |  | 1,021 |
Net operating loss carryforwards |  |  | 609 |  |  |  | 648 |
|  |  | 15,317 |  |  |  | 13,357 |
Valuation allowance |  |  | (391 | ) |  |  | (423 | )
Total long-term deferred tax assets (2) |  |  | 14,926 |  |  |  | 12,934 |
Long-term deferred tax liabilities: |  |  |  |  |  |  |  |
Deductible goodwill |  |  | (66,636 | ) |  |  | (46,057 | )
Depreciation |  |  | (3,100 | ) |  |  | (2,500 | )
Other long-term deferred tax liabilities |  |  | (1,358 | ) |  |  | (1,141 | )
Total long-term deferred tax liabilities (2) |  |  | (71,094 | ) |  |  | (49,698 | )
Net deferred tax liabilities |  | $ | (50,444 | ) |  | $ | (30,416 | )
(1) | Current deferred tax assets have been included in the consolidated balance sheets in other current assets.
(2) | Long-term deferred tax assets and liabilities have been included in the consolidated balance sheets in deferred income taxes and other liabilities.
Change in Gross Unrecognized Tax Benefits | The change in gross unrecognized tax benefits during 2012 and 2011 is as follows:
Gross balance at January 1, 2011 |  | $ | 1,889 |
Additions based on tax positions related to the current year |  |  | 542 |
Reductions due to lapse of applicable statute of limitations |  |  | (7 | )
Gross balance at December 31, 2011 |  |  | 2,424 |
Additions based on tax positions related to the current year |  |  | 416 |
Reductions due to lapse of applicable statute of limitations |  |  | (366 | )
Gross balance at December 31, 2012 |  | $ | 2,474 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32687-109319 + Details
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- Definition Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 48 -Paragraph 21 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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