NOTE 8 — Income Taxes

The current and deferred income tax (expense) benefit from continuing operations is as follows:

	Years ended December 31,
	2012			2011			2010
Current:
Federal	$	(136,000	)	$	—		$	—
State	(866,000		)	(803,000		)	(815,000		)
	(1,002,000		)	(803,000		)	(815,000		)
Deferred:
Federal	(2,520,000		)	4,737,000			(579,000		)
State	31,000			159,000			(76,000		)
	(2,489,000		)	4,896,000			(655,000		)
Total income tax (expense) benefit	$	(3,491,000	)	$	4,093,000		$	(1,470,000	)

A reconciliation of the effective income tax rate with the applicable statutory federal income tax rate is as follows:

	Years ended December 31,
	2012		2011		2010
Federal tax at statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	6.9	%	3.4	%	10.8	%
Valuation allowance	(0.4	)%	(6.4	)%	14.9	%
Non-deductible stock based compensation	1.6	%	—		6.5	%
Other	0.2	%	(1.0	)%	0.2	%
Effective income tax rate	43.3	%	31.0	%	67.4	%

Deferred income tax assets and liabilities are comprised of the following as of December 31:

	2012			2011
Deferred income tax assets:
Accruals not currently deductible for income taxes	$	2,429,000		$	2,322,000
Net operating loss carry-forwards	13,947,000			16,477,000
Total deferred income tax assets	16,376,000			18,799,000

Deferred income tax liabilities:
Depreciation	(20,739,000		)	(20,812,000		)
	(20,739,000		)	(20,812,000		)
Valuation allowance	(12,165,000		)	(12,189,000		)
Net deferred income tax liability	$	(16,528,000	)	$	(14,202,000	)

Amounts recognized in the consolidated balance sheets:
Current deferred income tax assets	$	78,000		$	67,000
Noncurrent deferred income tax assets	490,000			496,000
Noncurrent deferred income tax liabilities	(17,096,000		)	(14,765,000		)
	$	(16,528,000	)	$	(14,202,000	)

Deferred income taxes relate to the temporary differences between financial accounting income and taxable income and are primarily attributable to differences between the book and tax basis of property and equipment and net operating loss carry-forwards (expiring through 2032). At December 31, 2012, we have available federal and state net operating loss carryforwards of $1,937,000 and $264,040,000, respectively. Valuation allowances which fully reserve the state net operating loss carryforwards, net of federal tax benefit, (decreased) increased in 2012, 2011 and 2010 by ($24,000), $1,777,000 and $973,000, respectively. We believe that it is more likely than not that the remaining federal deferred tax assets will be realized based upon reversals of existing taxable temporary differences.

Interest expense on uncertain income tax positions is recorded as a component of interest expense. The uncertain income tax positions related to the appropriate period to depreciate certain of our assets and do not affect our effective income tax rate or our reported earnings. During the years 2011 and 2010, our liability relating to uncertain income tax positions decreased by $1,241,000 and $2,028,000 from the expiration of the statute of limitations.

We recorded interest expense on our uncertain income tax positions of $125,000 in 2010. No interest expense was recorded on our uncertain income tax positions in 2012 or 2011. During 2011 and 2010, we reversed $122,000 and $878,000, respectively, of previously recorded interest expense on uncertain income tax positions which are no longer subject to examination. There is no accrued interest on uncertain income tax positions as of December 31, 2012 or 2011.

The following table sets forth the changes in our uncertain income tax positions for the years ended December 31, 2012, 2011 and 2010:

	2012		2011			2010
Uncertain income tax positions at beginning of year	$	—	$	1,241,000		$	3,269,000
Increases as a result of tax positions taken during prior years	—		—			—
Decreases as a result of tax positions taken during prior years	—		—			—
Decreases as a result of lapse of statute of limitations	—		(1,241,000		)	(2,028,000		)
Uncertain income tax positions at end of year	$	—	$	—		$	1,241,000

We file income tax returns with the Internal Revenue Service (“IRS”) and the states in which we conduct business. We have identified the U.S. federal and state of Delaware as our major tax jurisdictions. As of December 31, 2012, tax years after 2008 remain open to examination for federal and Delaware income tax purposes.