Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

(9) INCOME TAXES

We did not generate any current or deferred tax benefit during the years ended December 31, 2014 or 2013. The following is a reconciliation of the reported amount of income tax benefit for the years ended December 31, 2014 and 2013 to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income:

	Years Ended December 31,
	2014			2013
	(in thousands)
Statutory tax benefit	$	(7,019	)	$	(340	)
Increase (decrease) in valuation allowance
Change in valuation allowance		5,940			337
Effect of permanent differences		1,076			—
Other		3			3
Total tax benefit	$	—		$	—

At December 31, 2014, we had available for U.S. federal income tax reporting purposes, a net operating loss (NOL) carryforward for regular tax purposes of approximately $102 million which expires in varying amounts during the tax years 2018 through 2034, an alternative minimum tax NOL carryforward of approximately $88 million which expires in varying amounts during the tax years 2018 through 2034, and a statutory depletion carryforward of approximately $9 million which can be carried forward indefinitely to offset our future taxable income, subject to certain limitations imposed by the Internal Revenue Code. Additionally, at December 31, 2014, we have a capital loss carryforward of approximately $2 million which will expire in 2015. Current federal income tax law allows corporations to deduct capital losses only if they offset capital gains. In 2003, we underwent a change in ownership, within the meaning of Internal Revenue Code Section 382, which significantly restricts our ability to utilize our domestic NOLs and capital losses.

The components of our federal deferred income taxes were as follows for the years ended December 31, 2014 and 2013:

	2014			2013
	(in thousands)
Deferred tax assets:
Net operating losses (NOL) carryover	$	34,657		$	33,973
Depletion carryover		3,020			3,020
Share based compensation		120			48
Deferred book liabilities		1			1
Debt and lease obligations		205			—
Loan origination fees		—			60
Book vs. tax basis in investments		24,000			20,683
Capital loss carryover		763			2,688
Property and equipment		5,024			—
Total gross deferred tax assets		67,790			60,473
Deferred tax liabilities:
Property and equipment		—			(824	)
Net deferred tax assets		67,790			59,649
Less valuation allowances		(67,790	)		(59,649	)
Deferred tax liabilities, net of valuation allowance	$	—		$	—

Our policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. The tax years 2011-2014 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which we are subject.  The tax years 2010-2014 also remain open for examination purposes for the Texas Franchise tax.

In May 2006, the Governor of Texas signed into law a Texas margin tax (H.B. No. 3) which restructured the state business tax by replacing the taxable capital and earned surplus components of the current franchise tax with a new “taxable margin” component.  Specifically, we became subject to an entity level tax on the portion of our total revenue (as that term is defined in the legislation) that is generated in Texas beginning in our tax year ending December 31, 2007. The Texas margin tax is imposed at a maximum effective rate of 0.7% of our total revenue that is apportioned to Texas.