Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

14. Income Taxes

(Loss) income before provision for income taxes is attributable to the following geographic locations for the years ended December 31 (in thousands):

	2012			2011 (1)
United States	$	(20,924	)	$	2,892
Foreign		(4,584	)		(1,099	)
	$	(25,508	)	$	1,793

(1) As recast to reflect the activity of SGT beginning January 1, 2011 combined with the balances of Solar Power, Inc. beginning March 31, 2011, as required under the accounting guidelines for a transfer of an entity under common control (refer to Note 5 —Acquisition of Solar Green Technology ).

The provision for income taxes consists of the following for the years ended December 31 (in thousands):

	2012			2011 (1)
Current:
Federal	$	(46	)	$	77
State		(21	)		181
Foreign		(395	)		378
Total current		(462	)		636
Deferred:
Federal		-			-
State		-			-
Foreign		382			(449	)
Total deferred		382			(449	)
Total provision for income taxes	$	(80	)	$	187

(1) As recast to reflect the activity of SGT beginning January 1, 2011 combined with the balances of Solar Power, Inc. beginning March 31, 2011, as required under the accounting guidelines for a transfer of an entity under common control (refer to Note 5 —Acquisition of Solar Green Technology ).

The reconciliation between the actual income tax expense and income tax computed by applying the statutory U.S. Federal income tax rate of 35% to pre-tax (loss) income before provision for income taxes for the years ended December 31 is as follows (in thousands):

	2012			2011 (1)
Provision for income taxes at U.S. Federal statutory rate	$	(8,928	)	$	628
State taxes, net of federal benefit		(13	)		117
Foreign taxes at different rate		1,591			312
Non-deductible expenses		(68	)		19
Valuation allowance		4,843			(889	)
Other		631			-
Impairment		1,864			-
	$	(80	)	$	187

(1) As recast to reflect the activity of SGT beginning January 1, 2011 combined with the balances of Solar Power, Inc. beginning March 31, 2011, as required under the accounting guidelines for a transfer of an entity under common control (refer to Note 5 —Acquisition of Solar Green Technology ).

Deferred income taxes reflect the net tax effects of loss carry forwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities for federal, state and foreign income taxes are as follows at December 31 are presented below (in thousands):

	2012			2011 (1)
Deferred income tax assets:
Net operating loss carry forwards	$	17,602		$	11,675
Temporary differences due to accrued warranty costs		690			684
Temporary differences due to bonus and vacation accrual		94			-
Temporary differences due to construction in progress		1,316			-
Other temporary differences		196			697
Credits		16			-
		19,914			13,056
Valuation allowance		(19,914	)		(12,842	)
Total deferred income tax assets		-			214
Deferred income tax liabilities:
Other temporary differences		(173	)
Total deferred income tax liabilities		(173	)		-
Net deferred tax (liabilities) assets	$	(173	)	$	214

(1) As recast to reflect the activity of SGT beginning January 1, 2011 combined with the balances of Solar Power, Inc. beginning March 31, 2011, as required under the accounting guidelines for a transfer of an entity under common control (refer to Note 5 —Acquisition of Solar Green Technology ).

As of December 31, 2012, the Company had a net operating loss carry forward for federal income tax purposes of approximately $40.1 million, which will start to expire in the year 2027. The Company had a total state net operating loss carry forward of approximately $41.0 million, which will start to expire in the year 2016. The Company has a foreign net operating loss carry forward of $5.4 million, some of which begin to expire in 2014. The Company had a federal alternative minimum tax credit of $16,000, which does not expire.

Utilization of the federal and state net operating losses is subject to certain annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. However, the annual limitation is not anticipated to result in the expiration of net operating losses and credits before utilization.

The Company recognizes deferred tax assets if it is more likely than not that those deferred tax assets will be realized. Management reviews deferred tax assets periodically for recoverability and makes estimates and judgments regarding the expected geographic sources of taxable income in assessing the need for a valuation allowance to reduce deferred tax assets to their estimated realizable value. Realization of the Company’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of the Company’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $7.1 million during the year ended December 31, 2012. The valuation allowance decreased by $3.3 million during the year ended December 31, 2011.

The Company has no unremitted foreign earnings from Hong Kong and immaterial foreign retained earnings from Italy and the PRC.

The Company currently files income tax returns in the U.S., as well as California, New Jersey, and certain other foreign jurisdictions. The Company is currently not the subject of any income tax examinations. The Company’s tax returns remain open for examination for years after December 31, 2008.

The Company had no unrecognized tax benefits for the years ended December 31, 2012 and 2011, respectively.