Income Taxes

12 Months Ended

Dec. 31, 2011

income tax disclosure [Abstract]

Income Tax

(7) Income Taxes

The Company provides for income taxes using the liability method. Accordingly, deferred taxes are recorded for the differences between the tax and book basis that will reverse in future periods (in thousands).

		2011		2010		2009
Current tax provision		$	1,772	$	1,516	$	3,394
Deferred tax provision (benefit)			(4,540)		(7,537)		15,229
		$	(2,768)	$	(6,021)	$	18,623
	A reconciliation of the provision (benefit) for income taxes is as follows (in thousands):
		2011		2010		2009
Federal income tax at statutory rate (35%)		$	(3,071)	$	(6,185)	$	11,993
State income taxes, net			(182)		(366)		709
Tax basis adjustment in Partnership related to issuance of common units			-		0		4,475
Non-deductible expenses			153		156		235
Other			332		374		1,211
Tax provision (benefit)		$	(2,768)	$	(6,021)	$	18,623
	The following table summarizes the components of the income tax provision (benefit) (in thousands):
		Years Ended December 31,
		2011		2010		2009
From continuing operations		$	(2,768)	$	(6,021)	$	(6,020)
From discontinued operations			-		0		24,643
Total tax provision (benefit)		$	(2,768)	$	(6,021)	$	18,623

	The principal component of the Company's net deferred tax liability are as follows (in thousands):
		Years Ended December 31,
		2011		2010
Deferred income tax assets:
	Net operating loss carryforward - current	$	-	$	-
	Net operating loss carryforward - non-current		45,569		34,365
	Investment in the Partnership		20,483		20,483
	Other comprehensive income		77		112
	Alternative minimum tax carry forward (AMT)		8		8
			66,137		54,968
	Less: valuation allowance		(20,483)		(20,483)
			45,654		34,485
Deferred income tax liabilities:
	Property, plant, equipment, and intangible assets - current		(501)		(501)
	Property, plant, equipment, and intangible assets - non-current		(129,207)		(122,686)
	Other		(1,634)		(1,014)
			(131,342)		(124,201)
Net deferred tax liability		$	(85,688)	$	(89,716)

At December 31, 2011, the Company had a net operating loss carryforward of approximately $120.0 million that expires from 2027through 2031. The Company also has various state net operating loss carryforwards of approximately $70.4 million which will begin expiring in 2027. Management believes that it is more likely than not that the future results of operations will generate sufficient taxable income to utilize these net operating loss carryforwards before they expire. Although the Company has generated net operating losses in the past, the Company expects to have future taxable income from its investment in the Partnership, generated by the remedial allocations of income among the unitholders and the income generated by operations.

Deferred tax liabilities relating to property, plant, equipment and intangible assets represent, primarily, the Company's share of the book basis in excess of tax basis for assets inside of the Partnership. The Company has also recorded a deferred tax asset in the amount of $20.5 million relating to the difference between its book and tax basis of its investment in the Partnership. Because the Company can only realize this deferred tax asset upon the liquidation of the Partnership and to the extent of capital gains, the Company has provided a full valuation allowance against this deferred tax asset.

Effective as of January 1, 2007, the Company is subject to the Texas margin tax. The new tax law had no significant impact on the Company's 2011 net deferred tax liability.

The Company adopted the provisions of FASB ASC 740-10-25-16 on January 1, 2007. A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows (In thousands):

Balance as of December 31, 2009	$	1,966
Increases related to prior year tax positions		69
Increases related to current year tax positions		296
Balance as of December 31, 2010	$	2,331
Decreases related to prior year tax positions		(6)
Increases related to current year tax positions		325
Balance as of December 31, 2011	$	2,650

Unrecognized tax benefits of $2.7 million, if recognized, would affect the effective tax rate. It is unknown when this uncertain tax position will be resolved. In the event additional interest and penalties are incurred prior to resolution, per company policy, such penalties and interest will be recorded to income tax expense.

At December 31, 2011, tax years 2008 through 2011 remain subject to examination by the Internal Revenue Services and tax years 2007 through 2011 remain subject to examination by various state taxing authorities.