Note 6 - Income Taxes

9 Months Ended

Sep. 30, 2015

6.	Income Taxes

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

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Current tax (benefit) expense	$	(39	)	$	546	$	(8	)	$	573
Deferred tax expense		–			–		–			–
Total tax (benefit) expense	$	(39	)	$	546	$	(8	)	$	573

The Company is not expecting a current federal tax liability for the year due to a projected taxable loss. The Company does expect a state tax liability for 2015 in states without sufficient net operating loss carry forwards. This state tax expense has been offset with a state tax benefit related to a prior year. Therefore, a net current tax benefit has been recorded for those states for the three and nine months ended September 30, 2015.

The Company’s deferred tax expense or (benefit) reflects the change in deferred tax assets or liabilities. The Company performs an analysis at the end of each reporting period to determine whether it is more likely than not the deferred tax assets are expected to be realized in future years. Based upon this analysis, a valuation allowance has been applied to our net deferred tax assets as of September 30, 2015 and December 31, 2014. Therefore, there has been no change in net deferred taxes for the three and nine months ended September 30, 2015.

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

	Nine Months Ended September 30,
	2015						2014
	Amount			%			Amount			%
Tax (benefit) expense at the U.S. federal statutory rate	$	(5,718	)		35.0	%	$	449			35.0	%
State tax based on income, net of refunds and federal benefits		(398	)		2.4			(53	)		(4.1	)
Taxes on subsidiaries’ earnings allocated to noncontrolling interests owners		(1,326	)		8.1			(1,906	)		(148.8	)
Valuation allowance		7,438			(45.5	)		1,529			119.4
Reduction of tax receivable		–			–			524			40.9
Other permanent differences		(4	)		–			30			2.4
Income tax (benefit) expense	$	(8	)		–	%	$	573			44.8	%

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