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Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes
NOTE 12. INCOME TAXES

During 2009, ARL's subsidiary TCI acquired stock of Income Opportunity Realty Investors, Inc. (IOT), such that more than 80% of IOT was owned by TCI. As a result, IOT joined the ARL consolidated group and joined a Tax Sharing and Compensating Agreement with TCI and ARL governing the use of current losses to offset taxable income. There was no deferred tax expense (benefit) recorded for 2011, 2010 or 2009 as a result of the uncertainty of the future use of the deferred tax asset.

The Federal income tax expense differs from the amount computed by applying the corporate tax rate of 35% to the income before income taxes as follow

 

     2011     2010     2009  

Computed "expected" income tax (benefit) expense

    $ (2,556 )    $ (34,368 )    $ (24,549 ) 

Book to tax differences in gains on sale of property

      2,184        419        (12,767 ) 

Book to tax differences from entities not consolidated for tax purposes

      (3,228 )      (3,638 )      9,786   

Book to tax differences of depreciation and amortization

      1,556        1,871        1,607   

Valuation allowance against current net operating loss benefit

      9,283        51,685        12,749   

Other book to tax differences

      (7,239 )      (15,969 )      13,174   
  

 

 

    

 

 

    

 

 

  
   $ —        $ —        $ —     
  

 

 

    

 

 

    

 

 

  

Alternative Minimum Tax

    $ —        $ —        $ —     
  

 

 

    

 

 

    

 

 

  

 

The tax effect of temporary differences that give rise to the deferred tax asset are as follows:

 

     2011     2010     2009  

Net operating losses and tax credits

    $ 68,968      $ 82,398      $ 75,043   

Basis difference of

       

Real estate holdings and equipment

      (2,500 )      (54,602 )      (50,020 ) 

Notes receivable

      5,314        10,329        9,550   

Investments

      (14,660 )      (14,462 )      (14,544 ) 

Notes payable

      25,299        56,208        56,410   

Deferred gains

      28,181        41,312        34,553   
  

 

 

    

 

 

    

 

 

  

Total

    $ 110,602      $ 121,183      $ 110,992   

Deferred tax valuation allowance

      (110,602 )      (121,183 )      (110,992 ) 
  

 

 

    

 

 

    

 

 

  

Net deferred tax asset

    $ —        $ —        $ —     
  

 

 

    

 

 

    

 

 

  

At December 31, 2011, 2010 and 2009 ARL had a net deferred tax asset due to tax deductions available to it in future years. However, as management could not determine that it was more likely than not that ARL would realize the benefit of the deferred tax asset, a 100% valuation allowance was established.

ARL has prior tax net operating losses and capital loss carryforwards of approximately $64.3 million expiring through the year 2030.