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Note 12. Income taxes | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income taxes | At December 31, 2012, we had fully utilized our federal net operating loss carryforward. At the date of acquisition, August 22, 2013, PIR had $748,000 of federal net operating losses, all of which are fully reserved. The provision (benefit) for income taxes consisted of the following components for the years ended December 31:
|  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |
Federal |  | $ | 590,000 |  |  | $ | 221,000 |
State |  |  | 103,000 |  |  |  | 39,000 |
Foreign |  |  | 73,000 |  |  |  | - |
Total Current |  |  | 766,000 |  |  |  | 260,000 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (213,000 | ) |  |  | (8,000 | )
State |  |  | 24,000 |  |  |  | (1,000 | )
|  |  | (21,000 | ) |  |  |  |
Total Deferred |  |  | (210,000 | ) |  |  | (9,000 | )
Total provision for income taxes |  | $ | 556,000 |  |  | $ | 251,000 |
Reconciliation between the statutory rate and the effective tax rate is as follows at December 31:
|  | 2013 |  |  | 2012 |
Federal statutory tax rate |  |  | 34.0 | % |  |  | 34.0 | %
State tax rate |  |  | 4.2 | % |  |  | 6.0 | %
Permanent difference - transaction costs |  |  | 10.1 | % |  |  | - |
Permanent difference - Other |  |  | 2.9 | % |  |  | 5.6 | %
Other |  |  | (4.3 | ) % |  |  | (0.5 | ) %
|  |  | 46.9 | % |  |  | 45.1 | %
Change in valuation allowance |  |  | - |  |  |  | - |
Total |  |  | 46.9 | % |  |  | 45.1 | %
Components of net deferred income tax assets, including a valuation allowance, are as follows at December 31:
|  | 2013 |  |  | 2012 |  |  | Change |
Assets: |  |  |  |  |  |  |  |  |
Net operating loss |  | $ | 583,000 |  |  | $ | - |  |  | $ | 364,000 |
Deferred revenue |  |  | 10,000 |  |  |  | 45,000 |  |  |  | (35,000 | )
Allowance for doubtful accounts |  |  | 140,000 |  |  |  | 47,000 |  |  |  | 93,000 |
Stock options |  |  | 154,000 |  |  |  | 107,000 |  |  |  | 47,000 |
Basis difference in intangible assets |  |  | 136,000 |  |  |  | 46,000 |  |  |  | 91,000 |
Accrued accounting fees |  |  | 15,000 |  |  |  | - |  |  |  | 16,000 |
Rent expense |  |  | 26,000 |  |  |  | - |  |  |  | 26,000 |
Foreign tax credits carryforward |  |  | 1,181,000 |  |  |  | - |  |  |  | 1,181,000 |
Other |  |  | 2,000 |  |  |  | - |  |  |  | 3,000 |
Total deferred tax asset |  |  | 2,247,000 |  |  |  | 245,000 |  |  |  | 1,786,000 |
Less: Valuation allowance |  |  | (1,762,000 | ) |  |  | - |  |  |  | (1,545,000 | )
Total net deferred tax asset |  |  | 485,000 |  |  |  | 245,000 |  |  |  | 241,000 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses |  |  | (16,000 | ) |  |  | (15,000 | ) |  |  | (1,000 | )
Basis difference in fixed assets |  |  | (100,000 | ) |  |  | (22,000 | ) |  |  | (78,000 | )
Debt discount - convertible note payable |  |  | (761,000 | ) |  |  | - |  |  |  | (761,000 | )
Purchase of intangibles |  |  | (1,233,000 | ) |  |  | - |  |  |  | (1,233,000 | )
Total deferred tax liability |  |  | (2,110,000 | ) |  |  | (37,000 | ) |  |  | (2,073,000 | )
Total net deferred tax asset / (liability) |  | $ | (1,625,000 | ) |  | $ | 208,000 |  |  | $ | (1,832,000 | )
The Company has $1,545,000 of total valuation allowance for deferred tax assets as of December 31, 2013. The valuation allowance relates to PIR federal net operating losses, state net operating losses, and foreign tax credit carryforwards. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. It has been determined that it is more likely than not that the deferred tax assets will not be realized, as it has been deemed unlikely that there will be generation of taxable income for the subsidiaries that carry these losses or that sufficient foreign source income would be generated to use the foreign tax credits. The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2013, 2012, 2011, 2010, and 2009 are open to audit by federal and state taxing authorities. The Company has reviewed its tax positions and has determined that it has no significant uncertain positions as of December 31, 2013 or 2012. The Company has not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Generally, such earnings become subject to U.S. tax upon the remittance of dividends and under certain other circumstances. It is not practical to estimate the amount of deferred tax liabilities on such undistributed earnings. Undistributed earnings are insignificant as of December 31, 2013 and 2012.

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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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