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Income Taxes
 6 Months Ended
Jun. 30, 2012
Income Taxes
(8) Income Taxes  

 

The Company accounts for income taxes under the asset and liability method. Deferred income taxes are provided for the temporary differences between the financial reporting and tax basis of the Company’s assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

 

The Company is in a net operating loss carryover position. The net operating losses not utilized can be carried forward for 20 years to offset future taxable income. As of June 30, 2012 and December 31, 2011, a full valuation allowance has been recorded against the Company’s deferred tax assets, as the Company has concluded that, under relevant accounting standards, it is more likely than not that the deferred tax assets will not be realizable.

 

The Company’s effective tax rate is based upon the rate expected to be applicable for the full fiscal year.  

 

The Company files a consolidated federal tax return in states that allow it, and in other states the Company files separate tax returns.

 

The Company’s prior federal and state income tax filings since 2008 remain open under statutes of limitation.  Innovative Power System Inc.’s statutes of limitation are open from the 2008 tax year forward for both federal and Commonwealth of Virginia purposes.  Quality Power Systems Inc.’s statutes of limitation are open from the 2008 tax year forward for both federal and Commonwealth of Virginia purposes. SMLB, Ltd. statutes of limitation are open from the 2008 tax year forward for both federal and State of Illinois purposes.