7. Income Taxes

Income tax expense (benefit) is comprised of the following:


					December 31,
		2011			2010		2009
Current
Federal	$	1,994		$	2,178	$	1,957
State		184			335		603
Deferred
Federal		(4,267	)		388		(1,022	)
State		(396	)		59		(138	)
Provision (benefit) for income taxes	$	(2,485	)	$	2,960	$	1,400

The tax effects of certain temporary differences between the Company's book and tax bases of assets and liabilities give rise to significant portions of the deferred income tax assets at December 31, 2011 and 2010. The deferred tax assets consisted of the following:


		December 31,
		2011			2010
Deferred tax assets
Current
Accounts receivable allowances	$	2,824		$	2,619
Accrued compensation		902			1,207
Accrued workers' compensation		3,263			3,201
Other		146			188
Total current deferred tax assets		7,135			7,215
Deferred tax liabilities
Current
Prepaid insurance		(799	)		(891	)
Net deferred tax assets—current		6,336			6,324
Deferred tax assets
Long-term
Goodwill and intangible assets		3,398			—
Property and equipment		112			179
Stock-based compensation		579			470
Total long-term deferred tax assets		4,089			649
Deferred tax liabilities
Long-term
Goodwill and intangible assets		—			(1,211	)
Net deferred tax assets (liabilities)—non-current		4,089			(562	)
Total net deferred tax assets	$	10,425		$	5,762

In assessing the realizability of deferred tax assets, management 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. Management considers projected future taxable income and tax-planning strategies in making this assessment. Based on this assessment, management believes it is more likely than not that the Company will realize its deferred income tax assets as of December 31, 2011.

A reconciliation of the statutory federal tax rate of 34.0% to the effective income tax rate for the years ended December 31, 2011, 2010, and 2009 is summarized as follows:


			December 31,
	2011		2010		2009
Federal income tax at statutory rate	34.0	%	34.0	%	34.0	%
State and local taxes, net of federal benefit	5.3		4.9		4.6
Jobs tax credits, net	23.1		(7.9	)	(16.3	)
Nondeductible meals and entertainment	(2.0	)	1.0		1.2
Tax asset adjustment—stock options	(0.5	)	0.9		4.4
Other	(4.3	)	—		0.1
Effective income tax rate	55.6	%	32.9	%	28.0	%

The Company is subject to taxation in jurisdictions in which it operates. The Company continues to remain subject to examination by U.S. federal authorities for the years 2008 through 2011 and for various state authorities for the years 2007 through 2011. As part of the acquisition of Addus HealthCare in 2006, the selling stockholders of the predecessor agreed to assume and indemnify the successor for any federal or state tax liabilities prior to the acquisition date.

The total amount of unrecognized tax benefits under ASC Topic 740 at December 31, 2011 was $115. If recognized, the entire amount would favorably impact the effective tax rate in future periods. Interest and penalties related to income tax liabilities are recognized in interest expense and general and administrative expenses, respectively. The Company does not anticipate a material change in its liabilities for uncertain tax positions during the next 12 months.

A summary of the activities associated with the Company's reserve for unrecognized tax benefits is as follows:


		Unrecognized
		Tax Benefits
Balance at December 31, 2009	$	115
Increases related to current year tax positions		—
Balance at December 31, 2010		115
Increases related to current year tax positions		—
Balance at December 31, 2011	$	115