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Income Taxes
9 Months Ended
Sep. 30, 2011
Income Taxes
12.
Income Taxes
 
Income tax expense was $1,794,575 and $853,485 for the three months ended September 30, 2011 and 2010, respectively, and $3,335,576 and $1,945,086 for the nine months ended September 30, 2011 and 2010, respectively. The effective tax rates were 37.6% and 41.9% for the three months ended September 30, 2011 and 2010, respectively, and 37.4% and 39.6% for the nine months ended September 30, 2011 and 2010, respectively.
 
The Company files income tax returns in the U.S. on a federal basis, in certain U.S. states, and in Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Our U.S. federal income tax returns for the years 2008 to 2010, our state income tax returns for 2008 to 2010, and our Italian income tax returns for 2009 and 2010 all remain subject to examination.

The Internal Revenue Service commenced an audit of our 2008 tax return during the third quarter of 2010 for which we recently received a proposed determination of no changes.  Based upon this preliminary report, we currently estimate no financial impact once the final determination letter is received.
 
In connection with the preparation of the financial statements, the Company performed an analysis to ascertain if it was more likely than not that it would be able to utilize, in future periods, the net deferred tax assets associated with its net operating loss (“NOL”) carryforward, research and development (“R&D”) tax credit carryforward, and its investment tax credit carryforward. We have concluded that the positive evidence outweighs the negative evidence and, thus, that those deferred tax assets not otherwise subject to a valuation allowance are realizable on a “more likely than not” basis. As such, we have not recorded a valuation allowance at September 30, 2011 or December 31, 2010, respectively.