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NOTE 12 - INCOME TAXES

12 Months Ended

Dec. 31, 2013

NOTE 12 - INCOME TAXES

The components of pre-tax loss for the years ended December 31, 2013 and 2012 are as follows:

	2013			2012
Domestic	$	(1,660	)	$	(1,867	)
Foreign		115			(880	)
Total	$	(1,545	)		(2,747	)

The components of the provision for income taxes attributable to continuing operations for the years ended December 31, 2013 and 2012 are as follows:

	2013			2012
Current:
Federal	$	8		$	-
State		(2	)		10
Foreign		20			79
Total current		26			89

Deferred:
Federal		60			197
State		7			23
Foreign		24			(24	)
Total deferred		91			196

	$	117			285

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes at December 31, 2013 and 2012 are as follows:

	2013			2012
DEFERRED TAX ASSETS:
Current deferred tax assets
Deferred revenue	$	920		$	858
Accrued expenses		104			30
Other		36			31
		1,060			919
Valuation allowance		(1,001	)		(1,003	)
Net current deferred tax assets		59			(84	)

Noncurrent deferred tax assets
Net operating losses		40,105			40,400
Research and development credit carryforwards		4,398			4,353
Minimum tax credit carryforwards		161			161
Fixed assets		-			171
Share based compensation		4			67
Other		2			-
		44,670			45,152
Valuation allowance		(43,243	)		(42,955	)
Net noncurrent deferred tax assets		1,427			2,197

Noncurrent deferred tax liabilities
Acquired intangibles		(1,347	)		(2,089	)
Goodwill		(316	)		(248	)
Fixed assets		(138	)		-
Total noncurrent deferred tax liabilities		(1,801	)		(2,337	)

Net current deferred tax asset (liability)		59			(84	)
Net noncurrent deferred tax liability	$	(374	)	$	(140	)

At December 31, 2013, we had federal net operating loss carryforwards of approximately $116,480, research and development credit carryforwards of approximately $4,868 and alternative minimum tax credit carryforwards of approximately $161. The net operating loss and research and development credit carryforwards will expire in varying amounts from 2018 through 2034, if not utilized. Minimum tax credit carryforwards carry forward indefinitely.

As a result of our various acquisitions in prior years, we may be subject to a substantial annual limitation in the utilization of the net operating losses and credit carryforwards due to the “change in ownership” provisions of the Internal Revenue Code of 1986. The annual limitation may result in the expiration of net operating losses before utilization.

Due to the uncertainty surrounding the timing of realizing the benefits of its favorable tax attributes in future tax returns, we have placed a valuation allowance against our net deferred tax assets, exclusive of goodwill. During 2013, the valuation allowance increased by approximately $286 due primarily to operations, including expiration of tax carryforwards. Approximately $8,251 of the valuation allowance relates to tax benefits for stock option deductions included in our net operating loss carryforward which we will allocate, if and when realized, directly to contributed capital to the extent the benefits exceed amounts attributable to book deferred compensation expense.

We consider undistributed earnings of our foreign subsidiaries as permanently reinvested and, accordingly, we have made no provision for U.S. federal or state income taxes thereon.

Our provision for income taxes attributable to continuing operations differs from the expected tax expense (benefit) amount computed by applying the statutory federal income tax rate of 34% to income before income taxes as a result of the following:

	For 2013				For 2012

Computed at statutory rate		$	(525	)	$	(934	)
State taxes, net of federal benefit			70			61
Permanent items and other			377			248
Credit carryforwards			(60	)		667
Foreign income taxed at different rates			58			354
Tax carryforwards not benefitted			197			(111	)
		$	117		$	285

The total amount of unrecognized tax benefits as of January 1, 2013 was approximately $1,195. The reconciliation of our unrecognized tax benefits at the beginning and end of the year is as follows:

Balance at January 1, 2013	$	1,195
Additions based on tax positions related to the current year		62
Additions for tax positions of prior years		(5	)
Balance at December 31, 2013	$	1,252

As of December 31, 2013, we had $1,252 of unrecognized tax benefits, which would affect the effective tax rate if recognized. The Company’s assessment of its unrecognized tax benefits is subject to change as a function of the Company’s financial statement audit.

Our practice is to recognize interest and/or penalties related to income tax matters in income tax expense. During 2013, we recognized $6 of interest and penalties in our income tax expense.

Asure files tax returns in the U.S. federal jurisdiction and in several state and foreign jurisdictions. We are no longer subject to U.S. federal income tax examinations for years ending before July 31, 2010 and are no longer subject to state and local or foreign income tax examinations by tax authorities for years ending before July 31, 2009. Asure is not currently under audit for federal, state or any foreign jurisdictions.

- 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.

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