Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

7. Income Taxes

The components of the income tax expense (benefit) are as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2011		2010		2011		2010
Current state and local tax expense	$	—	$	—	$	—	$	—
Deferred Federal tax expense		—		63,000		—		27,000
Deferred state and local tax expense		—		16,000		—		7,000
Income tax expense, including taxes attributable to discontinued operations		—		79,000		—		34,000
Less income tax expense attributable to discontinued operations (A)		—		—		—		(97,000	)
Income tax expense (benefit) (B)	$	—	$	79,000	$	—	$	(63,000	)

(A)	Represents the impact of income taxes attributable to income from discontinued operations.
(B)	This amount reflects the tax expense (benefit) from continuing operations as reported on the consolidated statement of operations for the periods presented.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The net deferred tax liability was approximately $67,000 at September 30, 2011 and December 31, 2010, respectively, and is reflected as a non-current liability in the accompanying consolidated balance sheets. The significant portion of the deferred tax items relates to: (1) the tax benefit of impairment charges before allowances at December 31, 2010; (2) net operating loss (“NOL”) carryforwards; (3) Federal alternative minimum tax (“AMT”) credit carryforwards; and (4) stock based compensation, all as they relate to deferred tax assets; and (5) the deferred tax liability resulting from the intangible assets recorded at the time of the Merger as it relates to deferred tax liabilities.

Income Taxes (continued)

A valuation allowance is required to reduce the deferred tax assets if, based on the weight of the evidence, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Accordingly, management has determined that a valuation allowance of approximately $7,550,000 and $8,254,000 at September 30, 2011 and December 31, 2010, respectively, was necessary. The allowance at September 30, 2011 and December 31, 2010 relates primarily to AMT credits and existing and expected NOL carryforwards, and in 2010, the excess of a portion of the tax basis of certain real estate development assets over their respective financial statement basis. The reduction in the allowance during the nine months ended September 30, 2011 results from the realization of a portion of the excess tax basis upon the sale of the East Lyme project, which was used to offset the Company’s pre-tax income in this period.