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INCOME TAXES
 12 Months Ended
Jan. 31, 2012
Income Tax Disclosure [Text Block]

 

 

15.

INCOME TAXES

 

 

 

The provision for income taxes from continuing operations for fiscal years 2011, 2010 and 2009 consists of the following (amounts in thousands):


 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal:

 

 

 

 

 

 

 

 

 

 

Current

 

$

434

 

 

—

 

$

(7,460

)

Deferred

 

 

13,792

 

 

2,963

 

 

11,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,226

 

 

2,963

 

 

3,836

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State and Local:

 

 

 

 

 

 

 

 

 

 

Current

 

 

685

 

 

—

 

 

422

 

Deferred

 

 

991

 

 

54

 

 

327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,676

 

 

54

 

 

749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,902

 

$

3,017

 

$

4,585

 

 

 

 

 

 


 

 

 

The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows as of January 31, 2012 and 2011 (amounts in thousands):


 

 

 

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

Deferral of service contract income

 

$

590

 

$

1,566

 

Accrued liabilities

 

 

553

 

 

249

 

Installment sales of limited partnerships

 

 

288

 

 

1,297

 

Stock based compensation

 

 

406

 

 

406

 

Federal net operating loss carryforward

 

 

—

 

 

2,192

 

AMT credit carryforward

 

 

23,994

 

 

23,373

 

State net operating loss carryforward

 

 

2,338

 

 

2,407

 

Other items

 

 

1,305

 

 

2,505

 

Valuation allowance

 

 

(1,676

)

 

(1,242

)

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

27,798

 

 

32,753

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Basis in pass through entities, including depreciation

 

 

(29,068

)

 

(21,713

)

Other

 

 

(282

)

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

(29,350

)

 

(21,713

)

 

 

 

 

Net deferred tax (liability) asset

 

$

(1,552

)

$

11,040

 

 

 

 

 


 

 

 

The Company has approximately $24.0 million and $23.4 million of AMT credit carryforwards as of January 31, 2012 and 2011, respectively. The AMT credit carryforwards can be used to offset future regular income tax liabilities subject to certain limitations. The AMT credit carryforwards have no expiration date. The Company must generate approximately $160 million in future taxable income to fully utilize the AMT credit carryforward. If the Company is not able to generate sufficient taxable income in subsequent years to allow for the utilization of the deferred tax assets, the Company would need to provide a valuation allowance for such deferred tax assets, thus increasing income tax expense.

 

 

 

The Company has state net operating loss carryforwards of approximately $31.5 million, net of the federal benefit, which will begin to expire in fiscal year 2012.

 

 

 

The Company has a valuation allowance of approximately $1,676,000 at January 31, 2012. The Company increased the valuation allowance by $434,000 and $664,000 in fiscal years 2011 and 2010, respectively. These adjustments to the valuation allowance are a result of estimates of realizing certain future state tax benefits. No adjustment was made in fiscal year 2009.

 

 

 

The Company paid income taxes of $1,550,000, $1,310,000 and $14,000 in fiscal years 2011, 2010 and 2009, respectively. The Company received refunds of income taxes of $7,208,000, $5,691,000 and $1,105,000 in fiscal years 2011, 2010 and 2009, respectively.

 

 

 

The effective income tax rate on consolidated pre-tax loss or income differs from the federal income tax statutory rate for fiscal years 2011, 2010 and 2009 as follows:


 

 

 

 

 

 

 

 

 

 

 

 

 

2011

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal income tax at statutory rate

 

 

35.0

%

 

35.0

%

 

35.0

%

State and local taxes, net of federal tax benefit

 

 

4.1

 

 

4.1

 

 

3.9

 

Net increase in valuation allowance

 

 

1.0

 

 

9.8

 

 

—

 

Domestic production activities deduction

 

 

(3.2

)

 

—

 

 

—

 

Uncertain tax positions

 

 

0.2

 

 

1.5

 

 

(0.3

)

Noncontrolling interest

 

 

(4.1

)

 

(17.7

)

 

(8.0

)

Other

 

 

0.3

 

 

(2.8

)

 

0.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

33.3

%

 

29.9

%

 

31.1

%

 

 

 

 

 


 

 

 

The Company files a U.S. federal income tax return and income tax returns in various states. In general, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for fiscal years ended January 31, 2005 and prior.

 

 

 

The Company applies the provisions of ASC 740-10-25-5 for uncertain tax positions. As a result of the adoption of this accounting standard, the Company recorded a $287,000 decrease to retained earnings. As of January 31, 2012, total unrecognized tax benefits were $2,157,000, and accrued penalties and interest were $327,000. If the Company were to prevail on all unrecognized tax benefits recorded, approximately $82,000 of the reserve would benefit the effective tax rate. In addition, the impact of penalties and interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense.

 

 

 

On a quarterly and annual basis, the Company accrues for the effects of open uncertain tax positions and the related potential penalties and interest. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on results of operations or financial position. A reconciliation of the beginning and ending amount of unrecognized tax benefits, including interest and penalties, is as follows (dollars in thousands):


 

 

 

 

 

 

 

 

 

 

Years Ended
January 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized tax benefits, beginning of year

 

$

2,976

 

$

2,338

 

Changes for tax positions for prior years

 

 

(492

)

 

104

 

Changes for tax positions for current year

 

 

—

 

 

534

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrecognized tax benefits, end of year

 

$

2,484

 

$

2,976