Income Taxes

The income tax benefit from continuing operations consists of the following:



	Years Ended December 31,
	2011			2010
Current tax provision:
Federal	$	—		$	—
State	249			33
Total current tax provision	249			33

Deferred tax (benefit) provision:
Federal	(19,358		)	(671		)
State	(3,632		)	(289		)
Total deferred tax (benefit) provision	(22,990		)	(960		)
Total income tax (benefit) provision	$	(22,741	)	$	(927	)

The income tax (benefit) for continuing operations for the year ended December 31, 2011 was primarily the result of purchase price adjustments which will provide a future source of taxable income enabling us to utilize our net operating losses and the release of our December 31, 2010 valuation allowance. The income tax (benefit) for continuing operations for the year ended December 31, 2010 was primarily the result of losses during the year ended December 31, 2010.

Reconciliations of the difference between income taxes from continuing operations computed at the statutory federal rate, and provision for income taxes for the years ended December 31, 2011 and 2010, are as follows:



	Years Ended December 31,
	2011		2010
Statutory rate	35.0	%	34.0	%
24/7 Formats transaction	5.4		—
Change in valuation allowance	27.0		(29.6	)
Tax exempt income	2.0		—
Transaction fees	(2.0	)	—
Return to provision true-up	3.1		—
Change in statutory rate	—		0.5
State taxes, net of federal benefits	0.6		5.5
Other	0.1		—
	71.2	%	10.4	%

The primary components of temporary differences which give rise to deferred taxes and deferred liabilities are as follows:



	December 31, 2011			December 31, 2010
Deferred tax assets
Capital loss	$	13,735		$	—
Net operating losses	54,123			12,992
Accrued interest	2,737			—
Restructuring	1,637			—
Depreciation	—			1,518
Transaction fees	79			30
Stock-based compensation	977			—
Deferred rent	380			386
Allowance for bad debt	725			90
Investment impairment	462			190
Other	343			195
Total deferred tax assets	75,198			15,401
Deferred tax liabilities
Depreciation	(4,602		)	—
Intangible assets	(49,148		)	(19,323		)
Deferred cancellation of indebtedness	(23,502		)	—
Accrued expense and other	(674		)	(9		)
Total deferred tax liabilities	(77,926		)	(19,332		)

Valuation allowance	(12,930		)	(2,614		)
Net deferred tax liability	$	(15,658	)	$	(6,545	)
Net deferred tax asset — current	1,961			—
Net deferred tax (liability) — non-current	$	(17,619	)	$	(6,545	)

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that either some portion or the entire deferred tax asset 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 the scheduled reversal of deferred tax liabilities, projected future taxable income, tax-planning strategies, and available carry-back capacity in making this assessment.

At December 31, 2011, we had net operating loss carry-forwards (NOLs) available to offset future taxable income of $131,547

for federal, and $116,959 for various state, tax returns. The NOLs expire in various amounts starting from 2018 to 2031.

The authoritative guidance associated with the accounting for uncertainty in income taxes recognized in an enterprise's financial statements prescribes a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return. The evaluation of a tax position in accordance with this interpretation is a two-step process. The first step is recognition, in which the enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of the liability to recognize in the financial statements.

We classify interest expense and penalties related to unrecognized tax benefits as income tax expense. The accrued interest and penalties were $1,200 at December 31, 2011. For the year ended December 31, 2011, we recognized $31of interest and penalties.

Unrecognized tax benefit activity is as follows:



	Unrecognized Tax Benefit
Assumption of Westwood unrecognized tax benefits upon acquisition	$	2,858
Additions for current period tax positions	31
Balance at December 31, 2011	$	2,889

We determined, based upon the weight of available evidence, that it is more likely than not that our tax positions will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the positions. Therefore, no reserve had been previously accrued until the acquisition of Westwood. The amount of unrecognized benefit that we estimate will be reversed in the next twelve months is $44. Substantially all our unrecognized tax benefits, if recognized, would affect the effective tax rate. We are currently under audit for our 2008 and 2009 U.S. federal income tax returns.