Income Taxes	3 Months Ended
Mar. 31, 2013
Income Taxes
Income Taxes	9. Income Taxes As a result of the Federal Tax Deconsolidation, the Company’s taxable income for the tax period from January 1, 2012, through October 31, 2012, will be included in the federal income tax return of Hallmark Cards’ consolidated federal tax group. The Company will file a separate federal tax return for the tax period from November 1, 2012, through December 31, 2012, and the full tax years thereafter. Notwithstanding the periods during which the Company was a member of Hallmark Cards’ consolidated federal tax group, the Company has continuously accounted for income taxes as if it were a separate-company taxpayer. For financial reporting purposes, the losses incurred while the Company was included in the Hallmark consolidated return were recorded as a tax benefit offset by a valuation allowance. However, upon exit from Hallmark Cards’ consolidated federal tax group, since the Company would be filing tax returns on separate company basis, that portion of the Company’s net operating losses that had previously been utilized by Hallmark Cards’ consolidated federal tax group, was not available to the Company as a separate-company taxpayer. Accordingly, in the fourth quarter of 2012, deferred tax assets, specifically the component related to net operating losses and the related valuation allowance, were each reduced by $229.7 million. As of December 31, 2012, management determined that it was more likely than not that the Company will realize an additional portion of the benefit of its deferred tax assets. Accordingly, during the fourth quarter of 2012, the Company released an additional $54.2 million of the previously established valuation allowance. During 2012, the alternative minimum tax (“AMT”) expense recognized was $268,000. In March 2013, $270,000 was paid related to this amount. During the three months ended March 31, 2013, the AMT recognized was $453,000 and this amount is included as a component of accrued liabilities on the accompanying consolidated balance sheet. In April 2013, $475,000 was paid. Since the Company is no longer included in the Hallmark federal tax group, there is no longer a limitation on the use of net operating losses (“NOLs”) incurred prior to being included in the Hallmark group. Accordingly, the Company has a deferred tax asset of $237.5 million related to the cumulative separate return limitation year (“SRLY”) NOLs as of December 31, 2012. In September 2012, the Company obtained a private letter ruling from the Internal Revenue Service in support of its position that as a result of the Federal Tax Deconsolidation, it will no longer be part of Hallmark Cards’ consolidated federal tax group and the restrictions on its ability to utilize the NOLs will no longer apply. As of December 31, 2012, the Company has a federal NOL carry forward of $678.6 million and various state NOL carry forwards. The determination of the state NOL carry forwards depends on apportionment percentages and state laws that can change from year to year and impact the amount of such carry forwards. If not utilized, the federal NOLs will expire between 2018 and 2021, and the state NOLs will expire between 2013 and 2032. At both December 31, 2012, and March 31, 2013, the total amount of unrecognized tax benefits for uncertain tax positions was $0. The Company recognized no increase or decrease in the amount of unrecognized tax benefits for uncertain tax positions. Accordingly, at both December 31, 2012, and March 31, 2013, there is no accrued interest related to uncertain tax positions. By virtue of its previous inclusion in Hallmark Cards consolidated tax group, the Company is subject to examination by the Internal Revenue Service for periods subsequent to March 10, 2003. Further, NOL carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they were generated has been closed by statute of limitations. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company is subject to examination for NOL’s generated prior to March 11, 2003 as those NOLs are utilized in future tax returns. As of 2012, the Company has separate company nexus in New York and Georgia and has also been included in the combined state tax returns of Hallmark Cards or HCC for California, Colorado and Illinois. NOL’s are subject to examination in the year they are utilized regardless of whether the tax year in which they were generated has been closed by statute. In recent years, changes enacted by various states have served to defer the effectiveness of the Company’s NOL carryforwards. Effective October 2010, California suspended the use of NOL carryforwards for 2010 and 2011. Also, Colorado has suspended NOLs in excess of $250,000 for 2011 through 2013 and Illinois has suspended the use of NOLs for 2011 through 2013. Additionally, New York and New York City have taxes based on capital.

9. Income Taxes

As a result of the Federal Tax Deconsolidation, the Company’s taxable income for the tax period from January 1, 2012, through October 31, 2012, will be included in the federal income tax return of Hallmark Cards’ consolidated federal tax group. The Company will file a separate federal tax return for the tax period from November 1, 2012, through December 31, 2012, and the full tax years thereafter.

Notwithstanding the periods during which the Company was a member of Hallmark Cards’ consolidated federal tax group, the Company has continuously accounted for income taxes as if it were a separate-company taxpayer. For financial reporting purposes, the losses incurred while the Company was included in the Hallmark consolidated return were recorded as a tax benefit offset by a valuation allowance. However, upon exit from Hallmark Cards’ consolidated federal tax group, since the Company would be filing tax returns on separate company basis, that portion of the Company’s net operating losses that had previously been utilized by Hallmark Cards’ consolidated federal tax group, was not available to the Company as a separate-company taxpayer. Accordingly, in the fourth quarter of 2012, deferred tax assets, specifically the component related to net operating losses and the related valuation allowance, were each reduced by $229.7 million.

As of December 31, 2012, management determined that it was more likely than not that the Company will realize an additional portion of the benefit of its deferred tax assets. Accordingly, during the fourth quarter of 2012, the Company released an additional $54.2 million of the previously established valuation allowance.

During 2012, the alternative minimum tax (“AMT”) expense recognized was $268,000. In March 2013, $270,000 was paid related to this amount. During the three months ended March 31, 2013, the AMT recognized was $453,000 and this amount is included as a component of accrued liabilities on the accompanying consolidated balance sheet. In April 2013, $475,000 was paid.

Since the Company is no longer included in the Hallmark federal tax group, there is no longer a limitation on the use of net operating losses (“NOLs”) incurred prior to being included in the Hallmark group. Accordingly, the Company has a deferred tax asset of $237.5 million related to the cumulative separate return limitation year (“SRLY”) NOLs as of December 31, 2012. In September 2012, the Company obtained a private letter ruling from the Internal Revenue Service in support of its position that as a result of the Federal Tax Deconsolidation, it will no longer be part of Hallmark Cards’ consolidated federal tax group and the restrictions on its ability to utilize the NOLs will no longer apply.

As of December 31, 2012, the Company has a federal NOL carry forward of $678.6 million and various state NOL carry forwards. The determination of the state NOL carry forwards depends on apportionment percentages and state laws that can change from year to year and impact the amount of such carry forwards. If not utilized, the federal NOLs will expire between 2018 and 2021, and the state NOLs will expire between 2013 and 2032.

At both December 31, 2012, and March 31, 2013, the total amount of unrecognized tax benefits for uncertain tax positions was $0. The Company recognized no increase or decrease in the amount of unrecognized tax benefits for uncertain tax positions. Accordingly, at both December 31, 2012, and March 31, 2013, there is no accrued interest related to uncertain tax positions.

By virtue of its previous inclusion in Hallmark Cards consolidated tax group, the Company is subject to examination by the Internal Revenue Service for periods subsequent to March 10, 2003. Further, NOL carryforwards are subject to examination in the year they are utilized regardless of whether the tax year in which they were generated has been closed by statute of limitations. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company is subject to examination for NOL’s generated prior to March 11, 2003 as those NOLs are utilized in future tax returns.

As of 2012, the Company has separate company nexus in New York and Georgia and has also been included in the combined state tax returns of Hallmark Cards or HCC for California, Colorado and Illinois. NOL’s are subject to examination in the year they are utilized regardless of whether the tax year in which they were generated has been closed by statute. In recent years, changes enacted by various states have served to defer the effectiveness of the Company’s NOL carryforwards. Effective October 2010, California suspended the use of NOL carryforwards for 2010 and 2011. Also, Colorado has suspended NOLs in excess of $250,000 for 2011 through 2013 and Illinois has suspended the use of NOLs for 2011 through 2013. Additionally, New York and New York City have taxes based on capital.