Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 12 — INCOME TAXES

Provisions for the Company’s income taxes for the three years ended December 31 were as follows:

	2011		2010		2009
Current:
Federal	$	35,868	$	—	$	—
State		14,623		—		—
		50,491		—		—
Deferred:
Federal		73,937		—		—
State		13,796		—		—
		87,733		—		—
	$	138,224	$	—	$	—

The components of the Company’s net deferred tax asset (liability) are as follows:

	December 31,
	2011			2010
Depreciation and amortization	$	820,606		$	897,334
Goodwill and indefinitely lived assets		(132,249	)		(305,792	)
Acquisition costs		265,048			—
Accruals and reserves		267,756			—
Alternative minimum tax credits		44,516			58,816
Net operating loss carryforwards		5,955,745			7,142,950
		7,221,422			7,793,308
Valuation allowance		(7,309,155	)		(7,793,308	)
Deferred tax liability	$	(87,733	)	$	—

Given the Company’s history of net operating losses, a full valuation of $7.3 million has been established on the Company’s net deferred tax assets. The Company has generated additional deferred tax liabilities related to its tax amortization of certain acquired indefinite lived intangible assets because these assets are not amortized for book purposes. The tax amortization in current and future years gives rise to a deferred tax liability which will only reverse at the time of ultimate sale or book impairment. Due to the uncertain timing of this reversal, the temporary differences associated with indefinite lived intangibles cannot be considered a source of future taxable income for purposes of determining a valuation allowance. As such, the deferred tax liability cannot be used to support an equal amount of the deferred tax asset related to the net operating loss carryforward.

A reconciliation of the Company’s federal statutory tax rate to its effective rate is as follows:

	Years Ended December 31,
	2011			2010			2009
Income tax at federal statutory rate		34.0	%		(34.0	)%		(34.0	)%
Increase (decrease) in tax resulting from:
State taxes, net of federal benefit		4.0	%		(6.3	)%		(6.3	)%
Permanent differences		222.2	%		196.8	%		6.0	%
Tax impact of indefinite lived intangible assets not amortized for book purposes		95.6	%		—	%		—	%
Change in valuation allowance		(260.1	)%		(156.5	)%		34.3	%
Alternative minimum tax requirement		55.0	%		—	%		—	%
		150.7	%		0.0	%		0.0	%

As of December 31, 2011, the Company has federal net operating loss carryforwards of approximately $15.4 million which begin to expire in 2023, and state net operating loss carryforwards of approximately $13.4 million, which begin to expire in 2012.

The Company files income tax returns in the United States federal jurisdiction and in various states. The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by the taxing authorities. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examination by tax authorities for years before 2008. At December 31, 2011, there are no expected material, aggregate tax effects of differences between tax return positions and the benefits recognized in the financial statements.

Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may have limited or may limit in the future the amount of net operating loss carryforwards which could be utilized annually to offset future taxable income and income tax liabilities. The amount of any annual limitation is determined based upon the Company’s value prior to an ownership change.