10.

Income Taxes

The provision for (benefit from) income taxes from continuing operations are as follows (in thousands):


	Year ended December 31,
	2011			2010		2009
Current:
Federal	$	857		$	1,211	$	(3,339	)
State		(474	)		606		71

		383			1,817		(3,268	)

Deferred:
Federal		283			601		623
State		171			156		47

		454			757		670

Total provision (benefit)	$	837		$	2,574	$	(2,598	)

Deferred income tax assets and liabilities are comprised of the following components (in thousands):


	December 31,
	2011			2010
Gross deferred income tax assets:
Workers' compensation claims liabilities	$	4,266		$	3,449
Safety incentives payable		2,064			1,993
Allowance for doubtful accounts		175			148
Deferred compensation		180			837
Tax effect of unrealized losses, net		883			926
Alternative minimum tax credit carryforward		740			0
State credit carryforward		490			63
State loss carryforward		15			11
Other		305			543

		9,118			7,970
Less valuation allowance		1,333			890

		7,785			7,080

Gross deferred income tax liabilities:
Tax depreciation in excess of book depreciation		(1,851	)		(1,636	)
Tax amortization of goodwill		(8,128	)		(7,184	)

		(9,979	)		(8,820	)

Net deferred income tax liabilities	$	(2,194	)	$	(1,740	)

The effective tax rate for continuing operations differed from the U.S. statutory federal tax rate due to the following:


	Year ended December 31,
	2011			2010			2009
Statutory federal tax rate		34.0	%		34.0	%		(34.0	)%
State taxes, net of federal benefit		(4.2	)		5.3			1.1
Valuation allowance on loss on impairment of investments		3.1			(4.4	)		(1.5	)
Adjustment for final positions on filed returns		(.3	)		1.5			4.3
Officer life insurance proceeds		(22.4	)		0			0
Nondeductible expenses and other, net		3.9			5.8			4.3
Federal tax-exempt interest income		(.9	)		(.7	)		(2.2	)
Federal and state tax credits		(7.7	)		(15.6	)		(11.7	)

		5.5	%		25.9	%		(39.7	)%

The Company has established a valuation allowance for certain deferred tax assets due to uncertainties regarding the Company's ability to generate future taxable investment gains in order to utilize certain investment impairment losses and investment loss carryforwards for tax purposes. The realization of a significant portion of net deferred tax assets is based in part on our estimates of the timing of reversals of certain temporary differences and on the generation of taxable income before such reversals. At December 31, 2011, we maintained a valuation allowance for approximately $1.3 million of federal and state tax benefits that are not expected to be utilized.

The Company is subject to income taxes in U.S. federal and multiple state and local tax jurisdictions. In the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2007. As of December 31, 2011 and 2010, we had no unrecognized tax benefits. We are currently under exam by the Internal Revenue Service and the State of California.

A portion of the consolidated income the Company generates is not subject to state income tax. Depending on the percentage of this income to total consolidated income, the Company's state effective rate can vary from expectations. As a result of the mix of income subject to state income tax, the state tax benefit was reduced by approximately $502,000 in the current year and approximately $50,000 in 2010 and by approximately $510,000 in 2009.

At December 31, 2011, the Company had capital loss carryforwards of approximately $2.2 million. Unless utilized in earlier tax years, the carryforwards expire in 2015. At December 31, 2011, the Company also had state tax loss carryforwards of $395,000, which expire in 2032.