Income Taxes
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Dec. 31, 2013
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The reconciliation of income tax benefit at the U.S. statutory rate of 34% for the years ended December 31, 2013 and 2012 to the Companys effective tax rate is as follows:
The benefit for income tax is summarized as follows:
The tax effects of temporary differences that give rise to the Companys net deferred tax liability as of December 31, 2013 and 2012 are as follows:
The tax effects of temporary differences that give rise to the Companys net deferred tax liability as of December 31, 2013 and 2012 are as follows:
As of December 31, 2013 and 2012, the Company had approximately $5,400,000 and $2,500,000 of federal and state net operating loss carryovers (NOLs) which begin to expire in 2028. Utilization of the NOLs may be subject to limitation under the Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined under regulations. The change in ownership of the Company that occurred in June 2011 resulted in an annual limitation on the usage of the Companys pre-acquisition net operating loss carryforwards.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will 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 and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against the entire deferred tax asset relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized.
The Company files U.S. federal and states of California tax returns that are subject to audit by tax authorities beginning with the year ended December 31, 2009. The Companys policy is to classify assessments, if any, for tax and related interest and penalties as tax expense.
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