Income Taxes

12 Months Ended

Dec. 31, 2011

Deferred tax assets and liabilities consisted of the following at December 31:

	2011			2010
Allowance for doubtful accounts	$	20,000		$	16,000
Inventory reserve		6,000			16,000
Closure costs		—			273,000
Loss contingency		64,000			83,000
Other		32,000			21,000
Current deferred tax asset		122,000			409,000
Valuation allowance		(122,000	)		(409,000	)
Net current deferred tax asset	$	—		$	—

	2011			2010
State net operating loss carryforward	$	520,000		$	465,000
Federal net operating loss carryforward		821,000			314,000
Tax credit carryforwards		120,000			120,000
Share-based compensation		104,000			89,000
Property, plant and equipment		(148,000	)		353,000
Other		6,000			5,000
Long term deferred asset		1,423,000			1,346,000
Valuation allowance		(1,423,000	)		(1,346,000	)
Net long-term deferred tax asset	$	—		$	—

The difference between the statutory rate of 34% and the effective rate of 0% for 2011 and 2010, respectively, is primarily related to the change in the valuation allowance.

The Company had a net operating loss for the year ended December 31, 2009 and carried back the 2009 taxable loss resulting in a federal tax refund of approximately $1,610,000 which was recorded as an Income Tax Receivable in 2009 and received in April 2010. As of December 31, 2011, the Company has a federal net operating loss carryforward of approximately $2,416,000 which begins expiring in 2028, and State net operating loss carryforwards of approximately $13,627,000 which begin expiring in 2022. In 2010, the federal net operating loss carryforward was reduced by approximately $5.6 million as a result of the Company’s election to not defer the $5.6 million of cancellation of debt income related to Just-Rite. Due to the cumulative losses over the past five years, the Company believes it is more likely than not that the deferred tax assets will not be realized. As a result, the Company has recorded a full valuation allowance on its current and noncurrent net deferred tax assets. The valuation allowance decreased by $210,000 and $1,677,000 during 2011 and 2010, respectively.

We are subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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Reference 2: http://www.xbrl.org/2003/role/presentationRef

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-Name Statement of Financial Accounting Standard (FAS)

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Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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+ Details

IMPERIAL INDUSTRIES INC 10-K