INCOME TAXES |
9 Months Ended | |
|---|---|---|
Sep. 30, 2016 | ||
| Income Tax Disclosure [Abstract] | ||
| INCOME TAXES |
NOTE 15. INCOME TAXES
We account for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” We did not record adjustments to the balance of our unrecognized tax benefits as of September 30, 2016 and 2015. At December 31, 2015, we had $0.1 million in liabilities for unrecognized tax benefits. Included in this liability amount is approximately $20,000 of accrued interest, net of federal income tax benefits, and $6,000 for the related penalties recorded in income tax expense on our Condensed Consolidated Statements of Operations. We expect to reduce the reserve balance to zero over the next twelve months due to statute expirations.
Valuation Allowance (Deferred Taxes)
For financial reporting purposes, we recorded a valuation allowance of $4.4 million as of September 30, 2016 and $2.8 million as of December 31, 2015 to offset a portion of the deferred tax assets related to the state net operating loss carryforwards. We regularly review our financial forecasts in an effort to determine our ability to utilize the net operating loss carryforwards for tax purposes. Accordingly, the valuation allowance is adjusted periodically based on our estimate of the benefit the company will receive from such carryforwards. During the third quarter of 2016, we identified an error in our estimated valuation allowance for certain deferred tax assets. We recorded an out-of-period adjustment to increase our valuation allowance by $1.6 million for a portion of the deferred tax assets related to state net operating loss carryforwards that we determined were not more likely than not to be realized. |