Note 4. Income Taxes

3 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Text Block]

Note 4. Income Taxes

Avalon recorded a net loss of $.4 million in the first quarter of 2012 compared with a net loss of $.3 million in the first quarter of 2011. Excluding the minor effect of the state income tax provisions, Avalon’s overall effective tax rate was 0% in the first quarter of 2012 and 2011.  The overall effective tax rate is different than statutory rates primarily due to a change in the valuation allowance. Avalon’s income tax benefit on the loss before taxes was offset by an increase in the valuation allowance. A valuation allowance is provided when it is more likely than not that deferred tax assets relating to certain federal and state loss carryforwards will not be realized. Avalon continues to maintain a valuation allowance against the majority of its deferred tax amounts until it is evident that the deferred tax asset will be utilized in the future.