Note 7 - Income Taxes

6 Months Ended

Jun. 30, 2013

7.	Income Taxes

The Company and its subsidiaries file U.S. federal and various U.S. state income tax returns. Current income tax expense (benefit) represents federal and state taxes based on tax paid or expected to be payable for the periods shown in the statement of operations. The income tax expense (benefit) in the accompanying condensed consolidated financial statements consists of the following (amounts in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Current tax expense (benefit)	$	(606	)	$	1,169		$	(3,267	)	$	144
Deferred tax benefit		(9,141	)		(185	)		(9,280	)		(3,136	)
Total tax expense (benefit)	$	(9,747	)	$	984		$	(12,547	)	$	(2,992	)

The deferred tax benefit in the three and six months ended June 30, 2013 reflects, among other temporary timing differences, the impact of the current quarter job charges from revisions to estimated profitability on construction projects which have resulted in a net operating loss. The deferred tax benefit in the six months ended June 30, 2012 primarily reflects the impact of $2.4 million related to the $6.7 million increase in the net income attributable to RLW’s noncontrolling interests for the amendment discussed in Note 9. The Company performed an analysis to determine whether it is more likely than not the deferred tax benefit at June 30, 2013 is expected to be deductible in future years. Based on this analysis the Company expects this deferred tax benefit to be deductible in future years as a result of expected future income.

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

	2013						2012
	Amount			%			Amount			%
Tax expense (benefit) at the U.S. federal statutory rate	$	(11,614	)		35.0	%	$	1,698			35.0	%
State franchise and income tax based on income, net of refunds and federal benefits		(437	)		1.3			9			0.2
Taxes on subsidiaries’ and joint ventures’ earnings allocated to noncontrolling ownership interests		(342	)		1.0			(4,213	)		(86.8	)
Non-taxable interest income		(155	)		0.5			(235	)		(4.8	)
Other permanent differences		1			--			(251	)		(5.3	)
Income tax benefit	$	(12,547	)		37.8	%	$	(2,992	)		(61.7	)%

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

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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