Income Tax

9 Months Ended

Sep. 30, 2011

Income Tax [Abstract]

Income Tax

11.  Income Tax

At both September 30, 2011 and December 31, 2010, we had approximately $2.4 million of gross unrecognized tax benefits.  If recognized, the entire amount of unrecognized tax benefits, net of $0.6 million federal tax on state benefits, would affect our effective tax rate.  We do not expect the total amount of unrecognized tax benefits to significantly increase or decrease during the balance of 2011.

As a result of being in a net operating loss carryforward position, we have established a deferred tax asset valuation allowance against the majority of our net deferred tax assets.  Accordingly, we are not recognizing much income tax expense (benefit) related to any loss before income tax.  The income tax expense (benefit) was $(0.48) million and $(0.98) million for the three month periods ending September 30, 2011 and 2010, respectively and $(0.75) million and $(1.09) million for the nine month periods ending September 30, 2011 and 2010, respectively.  The benefit recognized during the three- and nine-month periods in 2011and 2010 was primarily the result of current period adjustments to other comprehensive income (“OCI”), net of state income tax expense and adjustments to the deferred tax asset valuation allowance.  In addition, the three- and nine-month periods in 2011 included the benefit of a favorable tax adjustment ($0.09 million) relating to an Internal Revenue Service (“IRS”) review and interest ($0.13 million) relating to a refund.

Generally, the amount of income tax expense or benefit allocated to operations is determined without regard to the tax effects of other categories of income or loss, such as other comprehensive income (loss). However, an exception to the general rule is provided when, in the presence of a valuation allowance against deferred tax assets, there is a pretax loss from operations and pretax income from other categories in the current period.  In such instances, income from other categories must offset the current loss from operations, the tax benefit of such offset being reflected in operations. For the three month periods ending September 30, 2011 and 2010 this resulted in an income tax expense (benefit) of $(0.23) million and $(0.89) million, respectively.  For the nine month periods ending September 30, 2011 and 2010 this resulted in an income tax (benefit) of $(0.49) million and $(1.00) million, respectively.