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14. Income Tax | 12 Months Ended
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Dec. 31, 2011
Income Tax Disclosure [Abstract] |
14. Income Tax | 14. Income Tax The Company files a consolidated federal income tax return. This return includes all corporate companies 80% or more owned by the Company as well as the Company’s pro-rata share of taxable income from pass-through entities in which Company holds an ownership interest. On October 14, 2010 AE Biofuels acquired the remaining 49% interest in Energy Enzymes, Inc. During 2011 Energy Enzymes was included as a 100% consolidated entity for financial reporting purposes. State tax returns are filed on a consolidated, combined or separate basis depending on the applicable laws relating to the Company and its subsidiaries. Components of tax expense consist of the following:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |
Current: |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |
State and local |  | $ | 3,200 |  |  | $ | 3,200 |
Foreign |  |  | - |  |  |  | - |
|  |  | 3,200 |  |  |  | 3,200 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (83,707 | ) |  |  | - |
State and local |  |  | (14,772 | ) |  |  | - |
Foreign |  |  | - |  |  |  | - |
Income tax expense/(benefit) |  |  | (95,279 | ) |  | $ | 3,200 |
U.S. loss and foreign loss before income taxes are as follows:
|  | Year Ended December 31,
|  | 2011 |  |  | 2010 |
United States |  | $ | (17,188,080 | ) |  | $ | (7,635,366 | )
Foreign |  |  | (1,203,558 | ) |  |  | (925,643)3 | )
Loss before income taxes |  | $ | (18,391,638 | ) |  | $ | (8,561,009 | )
Income tax expense differs from the amounts computed by applying the statutory U.S. federal income tax rate (34%) to income before income taxes as a result of the following:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |
Income tax expense at the federal statutory rate |  | $ | (6,253,156 | ) |  | $ | (2,910,743 | )
Increase (decrease) resulting from: |  |  |  |  |  |  |  |
State tax |  |  | (1,441,008 | ) |  |  | (232,303 | )
Stock-based compensation |  |  | 41,703 |  |  |  | 134,497 |
Foreign loss |  |  | 290,821 |  |  |  | 244,847 |
Interest expense |  |  | 404,972 |  |  |  | 10,089 |
Credits |  |  | (990,000 | ) |  |  | — |
Other |  |  | 9,456 |  |  |  | 21,711 |
Valuation allowance |  |  | 7,841,933 |  |  |  | 2,735,102 |
Income tax expense |  | $ | (95,279 | ) |  | $ | 3,200 |
Effective tax rate |  |  | 0.52 | % |  |  | (0.04 | )%
The components of the net deferred tax asset or (liability) are as follows:
|  | December 31, |
|  | 2011 |  |  | 2010 |
Deferred tax assets (liabilities): |  |  |  |  |  |
Organization, start-up costs & intangible assets |  | $ | 8,916,114 |  |  | $ | 9,113,611 |
Stock-based compensation |  |  | 588,192 |  |  |  | 749,458 |
Property, plant and equipment |  |  | 2,511,067 |  |  |  | 2,964,914 |
Net operating loss carryforward |  |  | 11,578,808 |  |  |  | 5,062,449 |
Convertible debt |  |  | (103,127 | ) |  |  | (462,471 | )
Credit carryforward |  |  | 1,500,000 |  |  |  | — |
Other, net |  |  | 589,890 |  |  |  | 492,153 |
Total deferred tax assets (liabilities) |  |  | 25,580,944 |  |  |  | 17,920,114 |
Less valuation allowance |  | $ | (25,580,944 | ) |  | $ | (17,920,114 | )
Deferred tax assets (liabilities) |  |  | — |  |  |  | — |
Based on the Company’s evaluation of current and anticipated future taxable income, the Company believes it is more likely than not that insufficient taxable income will be generated to realize the net deferred tax assets, and accordingly, a valuation allowance has been set against these net deferred tax assets. We do not provide for U.S. income taxes for any undistributed earnings of the Company’s foreign subsidiaries, as the Company considers these to be permanently reinvested in the operations of such subsidiaries and have a cumulative foreign loss. At December 31, 2011 and 2010, these undistributed earnings (losses) totaled $(7,195,566), and $(5,980,052), respectively. If any earnings were distributed, some countries may impose withholding taxes. However, due to the Company’s overall deficit in foreign cumulative earnings and its U.S. loss position, the Company does not believe a material net unrecognized U.S. deferred tax liability exists. ASC 740 Income Taxes provides that the tax effects from an uncertain tax position can be recognized in the Company’s financial statements only if the position is more-likely-than-not of being sustained on audit, based on the technical merits of the position. Tax positions that meet the recognition threshold are reported at the largest amount that is more-likely-than-not to be realized. This determination requires a high degree of judgment and estimation. The Company periodically analyzes and adjusts amounts recorded for the Company’s uncertain tax positions, as events occur to warrant adjustment, such as when the statutory period for assessing tax on a given tax return or period expires or if tax authorities provide administrative guidance or a decision is rendered in the courts. The Company does not reasonably expect the total amount of uncertain tax positions to significantly increase or decrease within the next 12 months. As of December 31, 2011, the Company’s uncertain tax positions were not significant for income tax purposes. We conduct business globally and, as a result, one or more of the Company’s subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including such major jurisdictions as India, Mauritius, and the United States. The Company files a U.S. federal income tax return and tax returns in nine U.S. states, as well as in two foreign jurisdictions. Penalties and interest are classified as general and administrative expenses. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2011:
United States — Federal | 2006 – present
United States — State | 2005 – present
India | 2006 – present
Mauritius | 2006 – present
As of December 31, 2011, the Company had federal net operating loss carryforwards of $20,809,989 and state net operating loss carryforwards of $23,075,789. The Company also has approximately $1,500,000 of alcohol and cellulosic biofuel credit carryforwards. The federal net operating loss and other tax credit carryforwards expire on various dates between 2027 and 2031. The state net operating loss carryforwards expire on various dates between 2027 through 2030. Under the current tax law, net operating loss and credit carryforwards available to offset future income in any given year may be limited by US or India statute regarding net operating loss carryovers and timing of expirations or upon the occurrence of certain events, including significant changes in ownership interests. The Company’s India subsidiary also has net operating loss carryforwards as of March 31, 2012, its tax fiscal year end, of ($7,272,501) in US dollars, which expire from March 30, 2017 to March 30, 2020.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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