Income Taxes

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

Income Taxes

The Company files a consolidated U.S. Federal Income Tax return that includes all wholly-owned subsidiaries. State tax returns are filed on a consolidated or separate basis depending on applicable laws. The Company’s effective tax rate from continuing operations for the six months and three months ended June 30, 2011 was 32.1% and 33.1%, respectively. A reconciliation of the Federal statutory rate to our effective rate from continuing operations is as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
Computed expected tax expense	34.0	%	34.0	%	34.0	%	34.0	%
State taxes, net of Federal benefit	(1.2)		0.8		(1.1)		1.5
Permanent differences	(1.0)		7.4		(1.3)		6.7
Other	1.3		3.4		0.5		1.3
Total tax	33.1	%	45.6	%	32.1	%	43.5	%

Deferred tax assets and liabilities are determined using the enacted tax rates applicable to the period the temporary differences are expected to be recovered. Accordingly, the current period income tax provision can be affected by the enactment of new tax rates. The net deferred income taxes on the balance sheet reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at a various rates depending on whether the temporary differences are subject to Federal taxes, State taxes, or both. As of June 30, 2011 and December 31, 2010 the Company’s net deferred tax liability was $1,935,645 and $1,998,557, respectively.

Under GAAP guidance for the “Accounting for Uncertainty in Income Taxes”, the Company had no material unrecognized tax benefit and no adjustments to liabilities or operations were required. Additionally, Accounting for Uncertainty in Income Taxes, provides guidance on the recognition of interest and penalties related to income taxes. There were no interest or penalties related to income taxes that have been accrued or recognized as of and for the six months and three months ended June 30, 2011 and 2010. If any had been recognized these would be reported in income tax expense.

IRS Tax Audit

 In July 2011, the Company received a notice that its Federal income tax return for the year ended December 31, 2009 has been selected for examination by the Internal Revenue Service. The audit has not yet commenced. The final results of this audit are unknown, although management is confident in the tax assertions made in the tax return.