v2.4.0.6
Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Text Block]
12.  Income Taxes

The components of the income tax provision consist of the following:

 
 
Year Ended December 31,
 
 
 
2011
   
2010
   
2009
 
Current
                 
Federal
  $ 552,000     $ 1,968,000     $ 172,000  
State
    364,000       330,000       453,000  
      916,000       2,298,000       625,000  
Deferred
                       
Federal
    (142,000 )     798,000       591,000  
State
    (56,000 )     117,000       122,000  
      (198,000 )     915,000       713,000  
Total income tax provision
    718,000       3,213,000       1,338,000  
Income tax provision included in discontinued operations
    -       -       13,000  
Income tax provision included in continuing operations
  $ 718,000     $ 3,213,000     $ 1,325,000  

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:

   
Year Ended December 31,
 
   
2011
   
2010
   
2009
 
Income tax provision at statutory rate
  $ 519,000     $ 2,754,000     $ 1,038,000  
Increase (decrease) in income tax due to:
                       
State tax
    137,000       317,000       379,000  
Uncertain tax position provision
    65,000       135,000       -  
All other non-deductible items
    (3,000 )     7,000       (79,000 )
Total provision for income tax
  $ 718,000     $ 3,213,000     $ 1,338,000  

The tax effects of temporary differences that give rise to significant portions of the current deferred tax asset and non-current deferred tax liability at December 31, 2011 and 2010 are as follows:

   
Year Ended December 31,
 
Current deferred tax items
 
2011
   
2010
 
Allowance for doubtful accounts
  $ 141,000     $ 53,000  
Prepaid expenses
    (142,000 )     (93,000 )
Accrued expenses
    896,000       294,000  
Accrued insurance claims
    60,000       60,000  
Total deferred tax asset, current
  $ 955,000     $ 314,000  
Non-current deferred tax items
               
Property, plant & equipment
  $ (478,000 )   $ (396,000 )
Intangible assets
    (2,569,000 )     (1,984,000 )
Accrued expenses
    20,000       20,000  
Stock option expense
    594,000       253,000  
Net operating loss carryforward
    87,000       75,000  
Total deferred tax liability, long-term
    (2,346,000 )     (2,032,000 )
Net deferred tax liability
  $ (1,391,000 )   $ (1,718,000 )

As of December 31, 2011, the Company had no remaining federal net operating loss carry forward.  The Company’s gross state net operating loss carry forward at December 31, 2011, totaled approximately $1,600,000 and will begin expiring in 2021.  The Company is subject to examination by the IRS for the calendar years 2007 through 2010.  The Company is also subject to examination by various state taxing authorities for the calendar years 2006 through 2010.  The Company does not anticipate any significant increase or decrease in unrecognized tax benefit within the next 12 months.  The Company has not recorded a valuation allowance related to the current deferred tax asset as of December 31, 2011 and 2010 as the current and historical taxable income supports the realization of the assets.

Liability for Uncertain Tax Positions

In July 2006, the FASB issued guidance which clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with ASC Topic 740, and prescribed a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under this guidance, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, this guidance provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company adopted this guidance on January 1, 2007, however, the adoption did not have a  material impact on the Company’s Consolidated Financial Statements until fiscal year 2010. As a result of the implementation of this guidance, the Company has recognized the following liability for the year ended December 31, 2011 and 2010. A reconciliation of the beginning to ending amount of the recognized uncertain tax position liability is as follows:

   
Year Ended December 31,
 
   
2011
   
2010
 
Balance at January 1
  $ 135,000     $ -  
Additions based on tax positions related to the current year
    65,000       70,000  
Additions for tax positions of prior years
    -       65,000  
Reductions for tax positions of prior years
    -       -  
Reductions due to the statute of limitations
    -       -  
Settlements
    -       -  
                 
Balance at December 31
  $ 200,000     $ 135,000  

     The Company recognizes interest accrued to unrecognized tax benefits in interest expense and penalties in sales, general and administrative expense. During the years ended December 31, 2011 and 2010, the Company recognized $0 for interest and penalties due to the immaterial nature of both items.