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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | 9. Income Taxes The components of current and deferred income tax expense included in the Consolidated Statement of Operations for years ended December 31, 2013, 2012 and 2011 as determined in accordance with ASC 740, Income Taxes (“ASC 740”), are as follows:
|  | Year ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State and local |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | — |  |  |  | — |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State and local |  |  | — |  |  |  | — |  |  |  | — |
|  |  | — |  |  |  | — |  |  |  | — |
Income tax expense from operations |  | $ | — |  |  | $ | — |  |  | $ | — |
The Company has recorded its non-income based taxes as part of other liabilities and other expenses. Net operating losses The Company has generated net operating losses for tax purposes (“NOL”) during the years ended December 31, 2013, 2012, 2011 and prior periods which may be used to minimize income taxes paid. The following table provides a summary of the NOL activity for the years indicated:
|  | Year ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Beginning NOL |  | $ | (136,515 | ) |  | $ | (106,939 | ) |  | $ | (101,856 | )
U.S. GAAP income |  |  | 51,537 |  |  |  | 11,030 |  |  |  | 3,092 |
Tax differences: |  |  |  |  |  |  |  |  |  |  |  |
Temporary |  |  | 5,580 |  |  |  | (5,633 | ) |  |  | 209 |
Permanent |  |  | (61,561 | ) |  |  | (37,618 | ) |  |  | (9,334 | )
Net operating losses expired |  |  | — |  |  |  | 2,645 |  |  |  | 950 |
Ending NOL |  | $ | (140,959 | ) |  | $ | (136,515 | ) |  | $ | (106,939 | )
Temporary differences are primarily comprised of the difference between recognizing expenses for tax purposes and U.S. GAAP purposes associated with rent, stock-based compensation and depreciation of fixed assets. Permanent differences are primarily comprised of the difference between stock-based compensation amounts recognized for tax purposes and U.S. GAAP purposes at the time options are exercised (at the intrinsic value) or restricted stock is vested (at fair value of the share price). The Company may record additional NOLs from stock-based compensation awards which have been granted to employees and remain unexercised or unvested as of December 31, 2013. See Note 6 for additional details related to outstanding stock compensation awards. The Company’s net operating losses generally expire 20 years from the time they are generated. In addition, due to the Company incurring a series of changes in ownership as defined by Section 382 under the Internal Revenue Code, the Company is limited as to the amount of NOL it may use in a given year. Prior to the consideration of any limitations imposed due to ownership changes, the Company’s available NOLs will expire as follows:
Year Ending December 31: |
2018 |  | $ | 5,819 |
2019 |  |  | 5,101 |
2021 |  |  | 579 |
2023 |  |  | 608 |
2024 |  |  | 2,330 |
2025 |  |  | 3,239 |
2026 |  |  | 15,560 |
2027 |  |  | 24,655 |
2028 |  |  | 19,754 |
2029 |  |  | 14,218 |
2030 |  |  | 6,385 |
2031 |  |  | 6,052 |
2032 |  |  | 32,215 |
2033 |  |  | 4,444 |
|  | $ | 140,959 |
The amounts summarized above are subject to the following annual limitations as indicated by the years such NOLs were incurred:
NOLs generated between |  | Total |  |  | Annual Prospective Limitation |  |  | Amount Deemed Worthless |
1998 — 2004 |  | $ | 14,049 |  |  | $ | 524 |  |  | $ | 3,487 |
2005 — 2012 |  |  | 118,166 |  |  |  | 68,164 |  |  |  | — |
2012 — 2013 |  |  | 8,744 |  |  |  | — |  |  |  | — |
Net operating losses |  | $ | 140,959 |  |  | $ | 68,688 |  |  | $ | 3,487 |
Any NOL amounts not used because of the annual limitation can be used in future periods until expiration. Deferred tax asset As of December 31, 2013 and 2012, $111,635 and $49,946 of the NOLs has been generated from stock-based compensation amounts recognized for tax purposes at the time options are exercised (at the intrinsic value) or restricted stock is vested (at fair value of the share price) and previously expensed at the date of grant for U.S. GAAP purposes. Since these amounts cannot be recognized as a deferred tax asset under U.S. GAAP, accordingly, a deferred tax asset related to this amount is not recorded. A reconciliation of the NOL amount presented above and the amount utilized in calculating the deferred tax asset at December 31, 2013 and 2012, respectively, is as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Net operating losses |  | $ | 140,959 |  |  | $ | 136,515 |
Net operating losses deemed worthless |  |  | (3,487 | ) |  |  | (3,487 | )
Unrecognized stock-based compensation |  |  | (111,635 | ) |  |  | (49,946 | )
Gross net operating losses available for deferred tax asset |  |  | 25,837 |  |  |  | 83,082 |
Tax rate |  |  | 45.43 | % |  |  | 45.22 | %
Tax affected |  | $ | 11,738 |  |  | $ | 37,571 |
At December 31, 2013 and 2012, the composition of the deferred tax asset is summarized as follows by applying a 45.43% and 45.22% tax rate to the deferred tax items:
|  | December 31, |
|  | 2013 |  |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 11,738 |  |  | $ | 37,571 |
Stock-based compensation |  |  | 7,579 |  |  |  | 6,471 |
Fixed assets |  |  | — |  |  |  | 286 |
Deferred rent liability |  |  | 1,855 |  |  |  | 68 |
Other |  |  | 82 |  |  |  | 82 |
Deferred tax assets |  |  | 21,254 |  |  |  | 44,478 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | 7 |  |  |  | — |
Unrealized gains |  |  | 26 |  |  |  | — |
Deferred tax liabilities |  |  | 33 |  |  |  | — |
Total deferred tax assets less deferred tax liabilities |  |  | 21,221 |  |  |  | 44,478 |
Less: valuation allowance |  |  | (21,221 | ) |  |  | (44,478 | )
Net deferred tax assets and liabilities |  | $ | — |  |  | $ | — |
At December 31, 2013 and 2012, the deferred tax asset has been offset by a valuation allowance of $21,221 and $44,478 respectively. The Company believes it is more likely than not that the deferred tax asset will not be realized. A reconciliation of the statutory federal income tax rate of 35% and the Company’s effective rate is as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Federal statutory rate |  |  | 35.00 | % |  |  | 35.00 | % |  |  | 35.00 | %
Permanent differences |  |  | 0.09 | % |  |  | 0.37 | % |  |  | 32.57 | %
State income tax rate, net of federal benefit |  |  | 10.06 | % |  |  | 9.44 | % |  |  | 21.28 | %
(Decrease) in valuation allowance |  |  | (45.13 | %) |  |  | (44.82 | %) |  |  | (89.25 | %)
Other differences, net |  |  | (0.02 | %) |  |  | 0.01 | % |  |  | 0.40 | %
Effective rate |  |  | 0.00 | % |  |  | 0.00 | % |  |  | 0.00 | %
Uncertain tax positions As of December 31, 2013, the Company determined that it has no uncertain tax positions, interest or penalties as defined within ASC 740-10. The Company does not have unrecognized tax benefits. The Company does not believe that it is reasonably possible that the total unrecognized benefits will significantly increase within the next 12 months. The Company is not currently under audit by any taxing authority. Tax returns filed with each jurisdiction remain open to examination under the normal three-year statute of limitations.

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- 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. + 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 Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 Reference 5: 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 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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