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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE S – INCOME TAXES As of December 31, 2013, we had consolidated income tax net operating loss (“NOL”) carryforwards for federal income tax purposes of approximately $108,547,933. The federal NOL carryforwards from 1998 forward will expire in various years beginning in 2018 and ending through the year 2032. For 2013, approximately $24,724,748 of federal NOLs from the years 1998 – 2005 will be fully utilized. From 2023 through 2028, approximately $43 million of the NOL will expire, and from 2029 through 2032, approximately $65 million of the NOL will expire. The components of the provision for income taxes (benefits) are attributable to continuing operations as follows:
|  | 12 Month Period Ended December 31, 2013 |  |  | 12 Month Period Ended December 31, 2012 |  |  | 12 Month Period Ended December 31, 2011 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 481,055 |  |  | $ | — |  |  | $ | — |
State |  |  | 15,000 |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 496,055 |  |  | $ | — |  |  | $ | — |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | — |  |  | $ | — |  |  | $ | — |
Deferred income taxes reflect the net tax effects of the 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 tax assets and liabilities are as follows:
Deferred tax assets: |  |  |  |
Net operating loss and tax credit carryforwards |  | $ | 42,412,630 |
Capital loss carryforward |  |  | 385,188 |
Accrued expenses |  |  | 62,672 |
Deferred revenue |  |  | 644,367 |
Reserve for accounts receivable |  |  | 2,048,105 |
Reserve for inventory return |  |  | 130,012 |
Stock option and restricted stock awards |  |  | 907,476 |
Start-up costs |  |  | 107,154 |
Excess of book over tax depreciation |  |  | 1,428,417 |
Investment – unconsolidated entity |  |  | 3,687,310 |
Less: valuation allowance |  |  | (51,625,159 | )
|  |  | 188,172 |
Deferred tax liability: |  |  |  |
Prepaid expenses |  |  | 118,860 |
Property and equipment basis |  |  | 69,312 |
|  |  | 188,172 |
Net deferred tax asset |  | $ | — |
As reflected above, we have recorded a net deferred tax asset of $0 at December 31, 2013. As required by the Accounting for Income Taxes topic in the ASC, we have evaluated whether it is more likely than not that the deferred tax assets will be realized. Based on the available evidence, we have concluded that it is more likely than not that those assets would not be realizable without the recovery and rights of ownership or salvage rights of high value shipwrecks or substantial profits from our mining operations and thus a valuation allowance has been recorded as of December 31, 2013. The change in the valuation allowance is as follow:
December 31, 2013 |  | $ | 51,625,159 |  |  | December 31, 2012 |  | $ | 57,901,529 |
December 31, 2012 |  | $ | 57,901,528 |  |  | December 31, 2011 |  | $ | 52,515,797 |
Change in valuation allowance |  | $ | (6,276,369 | ) |  | Change in valuation allowance |  | $ | 5,385,732 |
Income taxes for the twelve month periods ended December 31, 2013, 2012 and 2011 differ from the amounts computed by applying the effective income tax rate of 34.0% to income taxes as a result of the following:
|  | 12 Month Period Ended December 31, 2013 |  |  | 12 Month Period Ended December 31, 2012 |  |  | 12 Month Period Ended December 31, 2011 |
Expected benefit |  | $ | (3,483,374 | ) |  | $ | (6,180,388 | ) |  | $ | (5,516,605 | )
Effects of: |  |  |  |  |  |  |  |  |  |  |  |
State income taxes net of federal benefits |  |  | (176,839 | ) |  |  | (181,423 | ) |  |  | (205,521 | )
U.S. Income Tax Expense at the 20% AMT Rate |  |  | 509,495 |  |  |  | — |  |  |  | — |
Nondeductible expenses |  |  | 31,640 |  |  |  | 17,994 |  |  |  | 17,657 |
Stock options and restricted stock awards |  |  | 790,011 |  |  |  | 223,720 |  |  |  | 833,749 |
Derivatives |  |  | (783,994 | ) |  |  | 322,848 |  |  |  | (1,693,247 | )
Change in valuation allowance |  |  | (6,276,369 | ) |  |  | 5,385,732 |  |  |  | 6,531,871 |
Change in net operating loss |  |  | 0 |  |  |  | 832,408 |  |  |  | 3,564 |
CFC Dividend Income |  |  | 9,190,723 |  |  |  | (374,051 | ) |  |  | — |
Change in rate estimate |  |  | 15,767 |  |  |  | (42,925 | ) |  |  | 23,798 |
Foreign Rate Differential |  |  | 662,745 |  |  |  | — |  |  |  | — |
Other, net |  |  | 16,250 |  |  |  | (3,914 | ) |  |  | 4,734 |
Income tax provision (benefit) |  | $ | 496,055 |  |  | $ | — |  |  | $ | — |
During the twelve-month periods ended December 31, 2013 and 2012, we recognized certain tax benefits and (liabilities), prior to any valuation allowances, related to stock option plans in the amount of $216,675 and $230,721, respectively. If we did not have a full valuation allowance, such benefits would be recorded as an increase in the deferred tax asset and an increase in additional paid-in capital. We have not recognized a material adjustment in the liability for unrecognized tax benefits and do not need to record any provision for accrued interest and penalties related to uncertain tax positions. The earliest tax year still subject to examination by a major taxing jurisdiction is 2010. We are currently in the process of seeking a private letter ruling request with the Internal Revenue Service which will grant us relief to make a late election to carryback our 2008 federal NOL either three, four, or five taxable years preceding the taxable year of the applicable NOL, in lieu of the general two-year carryback period. We would carryback the NOL five years to the 2003 tax year. There would be no cash-tax benefit of the carryback as we had a taxable loss during the 2003 tax year. The benefit of making the 5 year carryback election is that the 2008 NOL will now be able to offset 100 percent of future alternative minimum taxable income instead of only offsetting 90 percent. If the Internal Revenue Service grants us relief we will reverse the AMT tax provision in the quarter relief is granted as we will be able to fully offset alternative minimum taxable income instead of only 90 percent.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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