Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE M — INCOME TAXES

The Company’s expected federal income tax benefit computed at the statutory rate (34%) on the pre-tax loss amounted to $296,000 in 2012 and $504,000 in 2011. Such benefit was not recognized in the accompanying financial statements due to Milestone’s history of past operating losses, which required full valuation allowances for all of Milestone’s deferred tax assets at December 31, 2012 and 2011.

Deferred tax attributes resulting from differences between financial accounting amounts and tax bases of assets and liabilities at December 31, 2012 and 2011 are as follows:

	2012			2011
Current Assets
Allowance for doubtful accounts-short term	$	72,000		$	73,000
Inventory allowance		79,000			79,000
Warranty reserve		10,000			10,000
Impairment of German Investment		31,000			—
Deferred officers compensation		600,000			527,000
Subtotal		792,000			689,000
Valuation allowance		(792,000	)		(689,000	)
Current deferred tax asset	$	—		$	—
Non-current assets
Allowance for doubtful accounts-long term	$	67,000		$	149,000
Net operating loss carryforward		16,675,000			16,715,000
Subtotal		16,742,000			16,864,000
Valuation allowance		(16,742,000	)		(16,864,000	)
Non-current deferred tax asset	$	—		$	—

As of December 31, 2012 and 2011, Milestone has federal net operating loss carryforwards of approximately $48,537,000 and $48,805,000, respectively that will be available to offset future taxable income, if any, through December 2031. Milestone has state net operating losses of $2,875,000 and $2,028,000 in 2012 and 2011, respectively, expiring through December 2015.The utilization of Milestone’s net operating losses may be subject to a substantial limitation due to the “change of ownership provisions” under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carry forwards before their utilization. Milestone has established a 100% valuation allowance for all of its deferred tax assets due to uncertainty as to their future realization.

A reconciliation of the statutory tax rates for the years ended December 31, is as follows:

	2012			2011
Statutory rate		(34	)%		(34	)%
State income tax—all states		(6	)%		(6	)%
		(40	)%		(40	)%
Current year valuation allowance		40	%		40	%
Benefit for income taxes		0	%		0	%

Accounting for Uncertain Tax Positions:

The Company follows the Income Taxes Topic of the FASB Accounting Standards Codification, which provides clarification on accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and also provides guidance on derecognition, classification, interest and penalties, disclosure and transition. At December 31, 2012, no significant income tax uncertainties have been included in the Company’s Balance Sheets. The Company’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Statements of Operations. No interest and penalties are present for periods open. Tax returns for the 2009, 2010, and 2011 years are subject to audit by federal and state jurisdictions.