XML 65 R29.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Taxes [Abstract] |
Income Taxes | 21. INCOME TAXES For tax purposes, AFN contributed its assets and certain of its liabilities to Cohen Brothers in exchange for an interest in Cohen Brothers on December 16, 2009. AFN was organized and had been operated as a REIT for United States federal income tax purposes. Accordingly, AFN generally was not subject to United States federal income tax to the extent of its distributions to stockholders and as long as certain asset, income, distribution, and share ownership tests were met. As a result of the consummation of the Merger, IFMI ceased to qualify as a REIT effective as of January 1, 2010, and is instead treated as a C corporation for United States federal income tax purposes. The components of income tax expense (benefit) included in the consolidated statements of operations for each year presented herein are:
INCOME TAX EXPENSE
(Dollars in Thousands)
|  | 2013 |  | 2012 |  | 2011
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |
Federal income tax expense (benefit) |  | $ | (1,442) |  | $ | 142 |  | $ | 92
Foreign income tax expense (benefit) |  |  | 8 |  |  | 20 |  |  | 149
State and local income tax expense (benefit) |  |  | (57) |  |  | 120 |  |  | -
|  |  | (1,491) |  |  | 282 |  |  | 241
Deferred income tax expense (benefit) |  |  |  |  |  |  |  |  |
Federal income tax expense (benefit) |  |  | (1,827) |  |  | (703) |  |  | (1,047)
Foreign income tax expense (benefit) |  |  | - |  |  | - |  |  | -
State and local income tax expense (benefit) |  |  | (247) |  |  | (194) |  |  | (343)
|  |  | (2,074) |  |  | (897) |  |  | (1,390)
Total |  | $ | (3,565) |  | $ | (615) |  | $ | (1,149)
As of December 31, 2013, the Company had net prepaid taxes of $146 included as a component of other assets in the consolidated balance sheets. As of December 31, 2012, the Company had net current tax liability of $1,434 included as a component of accounts payable and other liabilities in the consolidated balance sheets. The current tax liability as of December 31, 2012 included the liability for unrecognized tax benefits described below. The expected income tax expense /(benefit) using the federal statutory rate differs from income tax expense / (benefit) pertaining to pre-tax income / (loss) as a result of the following for the years ended December 31, 2013, 2012, and 2011, respectively.
|  | 2013 |  | 2012 |  | 2011
Federal statutory rate - 35% |  | $ | (8,220) |  | $ | (929) |  | $ | (5,053)
Pass thru impact |  |  | 2,581 |  |  | 352 |  |  | 1,689
Deferred tax valuation allowance |  |  | 3,812 |  |  | (42) |  |  | 1,964
Recognition of previously unrecognized tax benefit |  |  | (1,231) |  |  | - |  |  | -
Other |  |  | (507) |  |  | 4 |  |  | 251
Total |  | $ | (3,565) |  | $ | (615) |  | $ | (1,149)
Deferred tax assets and liabilities are determined based on the difference between the book basis and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. The recognition of deferred tax assets is reduced by a valuation allowance if it is more likely than not that the tax benefits will not be realized. The components of the net deferred tax asset (liability) are as follows:
DEFERRED TAX ASSET AND LIABILITY
(Dollars in Thousands)
|  | December 31, 2013 |  | December 31, 2012
|  | Asset |  | Liability |  | Net |  | Asset |  | Liability |  | Net
Federal net operating loss carry-forward |  | $ | 33,439 |  | $ | - |  | $ | 33,439 |  | $ | 29,990 |  | $ | - |  | $ | 29,990
State net operating loss carry-forward |  |  | 5,291 |  |  | - |  |  | 5,291 |  |  | 5,066 |  |  | - |  |  | 5,066
Federal capital loss carry-forward |  |  | 23,784 |  |  | - |  |  | 23,784 |  |  | 25,283 |  |  | - |  |  | 25,283
Unrealized gain on debt |  |  | - |  |  | (13,274) |  |  | (13,274) |  |  | - |  |  | (14,095) |  |  | (14,095)
Unrealized loss on investment in Operating LLC |  |  | 110,382 |  |  | - |  |  | 110,382 |  |  | 113,398 |  |  | - |  |  | 113,398
Other |  |  | 873 |  |  | - |  |  | 873 |  |  | 1,253 |  |  | - |  |  | 1,253
Gross deferred tax asset / (liability) |  |  | 173,769 |  |  | (13,274) |  |  | 160,495 |  |  | 174,990 |  |  | (14,095) |  |  | 160,895
Less: valuation allowance |  |  | (165,025) |  |  | - |  |  | (165,025) |  |  | (167,498) |  |  | - |  |  | (167,498)
Net deferred tax asset / (liability) |  | $ | 8,744 |  | $ | (13,274) |  | $ | (4,530) |  | $ | 7,492 |  | $ | (14,095) |  | $ | (6,603)
As of December 31, 2013, the Company had a federal net operating loss (“NOL”) of approximately $95,540, which will be available to offset future taxable income, subject to limitations described below. If not used, this NOL will begin to expire in 2028. The Company also had net capital losses (“NCLs”) in excess of capital gains of $56,835 as of December 31, 2013, which can be carried forward to offset future capital gains, subject to the limitations described below. If not used, this carry forward will begin to expire in 2014. No assurance can be made that the Company will have future taxable income or future capital gains to benefit from its NOL and NCL carryovers. The Company has determined that its NOL and NCL carryovers are not currently limited by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). However, the Company may experience an ownership change as defined in that section (“Ownership Change”) in the future. If an Ownership Change were to occur in the future, the Company’s ability to use its NOLs, NCLs, and certain recognized built-in losses to reduce its taxable income in a future year would generally be limited to an annual amount (the “Section 382 Limitation”) equal to the fair value of the Company immediately prior to the Ownership Change multiplied by the “long term tax-exempt interest rate.” In the event of an Ownership Change, NOLs and NCLs that exceed the Section 382 Limitation in any year will continue to be allowed as carry forwards for the remainder of the carry forward period, and such NOLs and NCLs can be used to offset taxable income for years within the carry forward period subject to the Section 382 Limitation in each year. However, if the carry forward period for any NOL or NCL were to expire before that loss is fully utilized, the unused portion of that loss would be lost. In connection with the investments by Mead Park Capital and EBC, the Company entered into the 2013 Rights Agreement on May 9, 2013, to protect the use of previously accumulated NOLs, NCLs, and certain other tax attributes by dissuading investors from aggregating ownership in the Company and triggering an ownership change. See note 19. Notwithstanding the facts that the Company has determined that the use of its remaining NOL and NCL carry forwards are not currently limited by Section 382 of the Code, the Company recorded a valuation allowance for a significant portion of its NOLs and NCLs when calculating its net deferred tax liability as of December 31, 2012. The valuation allowance was recorded because the Company determined it is not more likely than not that it will realize these benefits. In determining its federal income tax provision for 2013, the Company has assumed that it will retain the valuation allowance applied against its deferred tax asset related to the NOL and NCL carry forwards as of December 31, 2013. The Company’s determination that it is not more likely than not that it will realize future tax benefits from the NOLs and NCLs may change in the future. In the future, the Company may conclude that it is more likely than not that it will realize the benefit of all or a portion of the NOL and NCL carry forwards. If it makes this determination in the future, the Company would reduce the valuation allowance and record a tax benefit as a component of the statements of operations in the period it makes this determination. From that point forward, the Company would begin to record net deferred tax expense for federal and state income taxes as a component of its provision for income tax expense as it utilizes the NOLs and NCLs, for which the valuation allowance was removed. A reconciliation of the beginning and ending unrecognized tax benefits for year ended December 31, 2013, 2012, and 2011, respectively, are as follows:
|  | 2013 |  | 2012 |  | 2011
Unrecognized tax benefits as of January 1 |  | $ | 1,231 |  | $ | 1,231 |  | $ | 1,231
Increases due to tax positions taken during prior periods |  |  | - |  |  | - |  |  | -
Increases due to tax positions taken in current period |  |  | - |  |  | - |  |  | -
Decreases due to settlements with tax authorities |  |  | - |  |  | - |  |  | -
Reductions due to lapse of applicable statute of limitations |  |  | (1,231) |  |  | - |  |  | -
Unrecognized tax benefits as of December 31 |  | $ | - |  | $ | 1,231 |  | $ | 1,231
During the years ended December 31, 2013, 2012, and 2011, the Company recognized interest expense of $0, $79, and $92, respectively. $171 was included in current taxes payable for accrued interest as of December 31, 2012. No penalty amounts were recognized. The Company files tax returns in the U.S. federal jurisdiction, various states or local jurisdictions, the United Kingdom, Spain, and France. With few exceptions, the Company is no longer subject to examination for years prior to 2010. In December 2012, IFMI received notification from the IRS that the IRS would examine its 2011 federal tax return. The exam was conducted in February 2013, IFMI received notification from the IRS that the exam was complete and no adjustments were identified. Pennsylvania Income Tax Assessment In October, 2013, the Company received an assessment from the Pennsylvania Department of Revenue in the amount of $4,683 (including penalties) related to a subsidiary of AFN for the 2009 tax year. The assessment denied this subsidiary’s Keystone Opportunity Zone (“KOZ”) credit for that year. The Company filed an administrative appeal of this assessment with the Pennsylvania Department of Revenue. If the assessment were to be upheld in the administrative appeal, the Company can then file an appeal with the Pennsylvania Board of Finance and Revenue. Finally, if the Pennsylvania Board of Finance and Revenue were to uphold the assessment, the Company could then seek relief in Pennsylvania Commonwealth Court. The Company has evaluated the assessment in accordance with the provisions of ASC 740 and determined not to record any reserve for this assessment.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration