Note 11 - Income Taxes and Deferred Tax Asset/Liability

12 Months Ended

Dec. 31, 2012

11.	Income Taxes and Deferred Tax Asset/Liability

The Company and its subsidiaries file U.S. federal and various U.S. state income tax returns. The Company’s 2007 through 2009 U.S. federal income tax returns have been examined by the I.R.S. Based on their examination, $314,000 was calculated as additional tax owed. The Company’s policy is to recognize interest related to any underpayment of taxes as interest expense, and penalties as administrative expenses. No interest or penalties have been accrued at December 31, 2012, and interest and penalties for the years ended December 31, 2011 and 2010 were not significant. The Company’s U.S. federal income tax returns for 2010 and later years are open and subject to examination by the I.R.S.

Current income tax expense represents federal and state income tax paid or expected to be payable for the years shown in the statements of operations. The income tax expense (benefit) in the accompanying consolidated financial statements consists of the following (in thousands):

	Years Ended December 31,
	2012			2011			2010
Current tax expense (benefit)	$	588		$	1,639		$	6,410
Deferred tax expense (benefit)		(1,167	)		(18,651	)		3,860
Total tax expense (benefit)	$	(579	)	$	(17,012	)	$	10,270

Deferred tax assets and liabilities consist of the following (in thousands):

	As of December 31,
	2012					2011
	Current		Long Term			Current		Long Term
Assets related to:
Accrued compensation and other	$	1,803	$	--		$	1,302	$	--
Amortization and impairment of goodwill		--		13,181			--		15,900
Accreted interest to put		--		939			--		587
Contingency on lawsuit		--		130			--		391
Noncontrolling interest		--		915			--		--
Revaluation of put/call liabilities		--		2,194			--		--
Liabilities related to:
Depreciation of property and equipment		--		(13,615	)		--		(14,040	)
Noncontrolling interest		--		--			--		(1,720	)
Other		--		(771	)		--		(290	)
Net asset (liability)	$	1,803	$	2,973		$	1,302	$	828

The Company expects that the deferred tax asset will be realized and accordingly no valuation allowance is necessary. During 2012, we recorded a long-term deferred tax liability of $360,000 on depreciable property as a result of a business combination. Refer to Note 2 for a description of the business combination.

The income tax provision (benefit) differs from the amount using the statutory federal income tax rate of 35% for the following reasons (amounts in thousands):

	Years Ended December 31,
	2012						2011						2010
	Amount			%			Amount			%			Amount			%
Tax expense (benefit) at the U.S. federal statutory rate	$	5,997			35.0	%	$	(18,101	)		35.0	%	$	12,773			35.0	%
State tax based on income, net of refunds and federal benefits		(58	)		(0.3	)		(573	)		1.1			879			2.4
Taxes on subsidiaries’ and joint ventures’ earnings allocated to noncontrolling interests owners		(5,938	)		(34.7	)		(444	)		0.9			(2,498	)		(6.8	)
Tax benefits of Domestic Production Activities Deduction		(84	)		(0.5	)		(202	)		0.4			(500	)		(1.4	)
Impairment associated with goodwill that is not amortizable for tax		--			--			2,603			(5.0	)		--			--
Non-taxable interest income		(529	)		(3.1	)		(376	)		0.7			(494	)		(1.4	)
Other permanent differences		33			0.2			81			(0.2	)		110			0.3
Income tax expense (benefit)	$	(579	)		(3.4	)%	$	(17,012	)		32.9	%	$	10,270			28.1	%

As a result of the Company’s analysis, management has determined that the Company does not have any material uncertain tax positions.