11. Income taxes
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Dec. 31, 2011
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Income Tax Disclosure [Text Block] |
The
Company did not record an income tax provision for 2011 and
2010, other than $800 for the minimum state tax provision.
A reconciliation of income taxes with the amounts computed
at the statutory federal rate follows:
The
deferred tax assets and deferred tax liabilities recorded
on the balance sheet are as follows:
As
of December 31, 2011, the Company had net operating losses
available for carry forward for federal tax purposes of
approximately $34 million expiring beginning in 2019. These
carry forward benefits may be subject to annual limitations
due to the ownership change limitations imposed by the
Internal Revenue Code and similar state provisions. The
annual limitation, if imposed, may result in the expiration
of net operating losses before utilization.
As
of December 31, 2011, the Company has recorded a
$13,900,000 valuation allowance against a portion of its
deferred tax assets, since at that time it was believed
that such assets did not meet the more likely than not
criteria to be recoverable through projected future
profitable operations in the foreseeable future.
Effective
January 1, 2007, the Company adopted FASB guidance that
addresses the determination of whether tax benefits claimed
or expected to be claimed on a tax return should be
recorded in the financial statements. Under this guidance,
the Company may recognize the tax benefit from an uncertain
tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements
from such a position should be measured based on the
largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement. The FASB also
provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in
interim periods and requires increased disclosures. As of
December 31, 2011 and 2010, the Company does not have a
liability for unrecognized tax benefits.
The
Company files income tax returns in the U.S. federal
jurisdiction and the state of California. The Company is
subject to U.S. federal or state income tax examinations by
tax authorities for years after 2002. During the periods
open to examination, the Company has net operating loss and
tax credit carry forwards for U.S. federal and state tax
purposes that have attributes from closed periods. Since
these net operating losses and tax credit carry forwards
may be utilized in future periods, they remain subject to
examination. The Company’s policy is to record
interest and penalties on uncertain tax provisions as
income tax expense. As of December 31, 2011, the Company
has no accrued interest or penalties related to uncertain
tax positions. The Company believes that it has not taken
any uncertain tax positions that would impact its
consolidated financial statements as of December 31, 2011
or 2010.
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