NOTE H - INCOME TAXES

The income tax provision charged to continuing operations for the years ended December 31, 2012, 2011, and 2010, was as follows:

	2012		2011		2010

Current:
U.S. federal	$	3,947,400	$	35,561	$	(190,869	)
Foreign	5,313,874		3,343,374		250,190
State and local	264,269		698,362		374,029
	9,525,543		4,077,297		433,350

Deferred expense	359,535		2,469,953		146,550
	$	9,885,078	$	6,547,250	$	579,900

The components of the Company’s income before income tax expense attributable to domestic and foreign operations amounted to $6,018,971 and $19,537,986, respectively, for the year ended December 31, 2012. The components of the Company’s income before income tax expense attributable to domestic and foreign operations amounted to $6,085,192 and $11,295,273, respectively, for the year ended December 31, 2011. The components of the Company’s loss before income tax expense attributable to domestic and foreign operations amounted to $(3,002,790) and $2,360,008, respectively, for the year ended December 31, 2010. The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate (35% for 2012, 34% for 2011 and 2010) to pretax income (loss) from continuing operations for the years ended December 31, 2012, 2011, and 2010, due to the following:

	2012		2011			2010
Computed “expected” tax expense	$	8,944,935	$	5,909,358		$	(218,546	)
Increase (decrease) in income taxes resulting from:
Change in effective rates used for deferred taxes	—		(503,693		)	—
Nondeductible expenses and other	768,652		534,742			548,943
State and local taxes, net of federal benefit	171,491		606,843			249,503
	$	9,885,078	$	6,547,250		$	579,900

Net deferred tax liabilities consist of the following components as of December 31, 2012 and 2011:

	2012			2011
Deferred tax assets
Foreign tax credits	$	473,405		$	2,034,130
Net operating loss carry forwards	462,548			776,647
Other	92,983			—
Total deferred tax assets	1,028,936			2,810,777
Deferred tax liability
Property, equipment, and intangible asset	(8,646,047		)	(10,068,353		)
Total deferred tax liabilities	$	(7,617,111	)	$	(7,257,576	)

The components giving rise to the net deferred tax items described above have been included in the accompanying balance sheets as of December 31, 2012 and 2011, as follows:

	2012			2011

Current assets	$	—		$	—
Noncurrent (liabilities)	(7,617,111		)	(7,257,576		)
	$	(7,617,111	)	$	(7,257,576	)

As of December 31, 2012, the Company has U.S. net operating loss carry forwards for U.S. federal income tax purposes of approximately $1.4 million. These net operating losses are available to offset future federal taxable income, if any, and expire from 2027 through 2030. The amount of net operating loss carry forwards that may reduce federal income taxes in any given year are subject to annual limitations and taxable income requirements. The foreign tax credit of $473,405 expires in 2020.

The Company files a U.S. consolidated federal income tax return for operating activities in the U.S. and Canada. The Company also files federal and local tax returns in Canada, as well as state tax returns in a number of state and local jurisdictions in the U.S. The Company’s U.S. federal income tax returns filed for 2009 through 2011 are subject to audit by the IRS. The Company’s income tax returns filed in Canada for 2009 through 2011 remain subject to examination by Canadian authorities. As of December 31, 2012 and 2011, the Company had no unrecognized tax benefits within its provision for income taxes.