2.4.0.8009 - Disclosure - INCOME TAXEStruefalsefalse1false falsefalseContext_6ME__30-Jun-2013http://www.sec.gov/CIK0001051114duration2013-01-01T00:00:002013-06-30T00:00:001true 1us-gaap_IncomeTaxDisclosureAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Income Tax Disclosure [Abstract]2false 2us-gaap_IncomeTaxDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<div align="center"> <table style="width: 100%; font-family: times new roman; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0"> <tr valign="top"> <td style="width: 27pt;"> <div style="text-indent: 0pt; margin-left: 0pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">4.</font></div> </td> <td> <div align="left"><font style="display: inline; font-family: times new roman; font-size: 10pt;"><font style="display: inline; font-weight: bold;">INCOME TAXES</font></font></div> </td> </tr> </table> </div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 27pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">Innotrac utilizes the liability method of accounting for income taxes in accordance with ASC topic No. 740 – <font style="font-style: italic; display: inline;">Income Taxes</font>.  Under the liability method, deferred taxes are determined based on the difference between the financial and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.  A valuation allowance is recorded against deferred tax assets if the Company considers it is more likely than not that deferred tax assets will not be realized.  Innotrac’s gross deferred tax asset as of June 30, 2013 and December 31, 2012 was approximately $21.7 million and $22.3 million, respectively.   This deferred tax asset was generated primarily by net operating loss carryforwards created by net losses in prior years.  Innotrac has Federal net operating loss carryforwards of $52.1 million at December 31, 2012 that expire between 2021 and 2032.</font></div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 27pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">Innotrac’s ability to generate taxable income from future operations is dependent upon general economic conditions, competitive pressures on sales and margins and other factors beyond management’s control. These factors, combined with losses in recent years, create uncertainty about the ultimate realization of the gross deferred tax asset in future years.  Therefore, a valuation allowance of approximately $19.5 million and $20.3 million has been recorded as of June 30, 2013 and December 31, 2012, respectively.  Income taxes associated with future earnings may be offset by a reduction in the valuation allowance.  For the three and six months ended June 30, 2013, the deferred income tax expense of $367,000 and $848,000, respectively, was offset by a corresponding decrease in the deferred tax asset valuation allowance.  When and if the Company can return to consistent profitability and management determines that it is more likely than not that the Company will be able to utilize the deferred tax assets prior to their expiration, the valuation allowance may be reduced or eliminated.</font></div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 0pt; margin-right: 0pt;"> </div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 27pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">ASC topic No. 740 requires that the Company determine whether it is more likely than not that a tax position will be sustained upon audit, based on the technical merits of the position.  A tax position that meets the more likely than not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.  The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.  The Company has recognized tax benefits from all tax positions, and there has been no adjustment to any net operating loss carryforwards as a result of ASC topic No. 740 and there are no unrecognized tax benefits and no related ASC topic No. 740 tax liabilities at June 30, 2013 and December 31, 2012.</font></div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 27pt; margin-right: 0pt;"> </div> <div align="justify" style="text-indent: 0pt; display: block; margin-left: 27pt; margin-right: 0pt;"><font style="display: inline; font-family: times new roman; font-size: 10pt;">The Company generally recognizes interest and/or penalties related to income tax matters in general and administrative expenses.  As of June 30, 2013, there is no accrued interest or penalties related to uncertain tax positions.</font></div>falsefalsefalsenonnum:textBlockItemTypenaThe 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.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 false0INCOME TAXESfalseINCOME TAXESUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://www.innotrac.com/role/INCOMETAXES12