12. Income Taxes

The provision for income taxes consists of the following:


	Year Ended December 31,
	2011			2010			2009
Deferred:
Federal	$	11,367,771		$	5,650,309		$	9,850,636
State and local		1,437,062			464,169			1,299,941

		12,804,833			6,114,478			11,150,577
Valuation allowance		(12,804,833	)		(6,114,478	)		(11,150,577	)

	$	—		$	—		$	—

The provision for income taxes varies from the amount determined by applying the U.S. federal statutory rate to income before income taxes as a result of the following:


	Year Ended December 31,
	2011			2010			2009
U.S. statutory income tax rate		34.0	%		34.0	%		34.0	%
State and local taxes, net of federal tax benefit		4.5	%		2.3	%		4.6	%
Permanent differences between book and tax and other		1.5	%		(5.6	)%		1.3	%
Valuation allowance		(40.0	)%		(30.7	)%		(39.9	)%

Effective income tax rate		0.0	%		0.0	%		0.0	%

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable losses, and projections for future periods over which the deferred tax assets are deductible, the Company determined that a 100% valuation allowance of deferred tax assets was appropriate. The valuation allowance for deferred tax assets includes amounts for which subsequently recognized tax benefits will be applied directly to contributed capital.

The components of the deferred tax asset are as follows:


	December 31,
	2011			2010
Current accruals	$	1,751,515		$	2,026,725
Depreciation and amortization		2,644,059			2,418,332
Deferred compensation		4,648,719			3,778,527
Net operating loss carryovers		123,114,797			111,130,672

Deferred tax assets		132,159,090			119,354,256
Valuation allowance		(132,159,090	)		(119,354,256	)

Net deferred tax assets	$	—		$	—

As of December 31, 2011, we had federal net operating loss carryforwards of approximately $339.4 million of which approximately $1.7 million will expire by 2012 and approximately $337.7 million will expire between 2018 and 2031. As of December 31, 2011, we had state net operating loss carryforwards of approximately $8.0 million which will expire at various dates between 2012 and 2031 if not utilized.

The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. As the Company has a federal Net Operating Loss carryforward from the year ended December 31, 1994 forward, all tax years from 1994 forward are subject to examination. As states have varying carryforward periods, and the Company has recently entered into additional states, the states are generally subject to examination for the previous 10 years or less.

The Company recognizes interest accrued, if any, net of tax and penalties, related to unrecognized tax benefits as components of income tax provision as applicable. As of December 31, 2011, accrued interest and penalties were not material.