Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
INCOME TAXES

11. INCOME TAXES

The income tax provision consists of the following:

 

    September 30,     September 30,       September 30,  
        2011     2010  

Current:

   Federal   $ 4,397,712     $ 3,587,094  
    State     2,246,999       1,777,895  
       

 

 

    

 

 

  
          6,644,711       5,364,989  
       

 

 

    

 

 

  

Deferred:

   Federal     (3,131,017 )      354,076  
    State     (274,095 )      20,365  
       

 

 

    

 

 

  
          (3,405,112 )      374,441  
       

 

 

    

 

 

  
        $ 3,239,599     $ 5,739,430  
       

 

 

    

 

 

  

 

A reconciliation of the income tax provision relative to continuing operations with amounts determined by applying the statutory U.S. Federal income tax rate of 34% to consolidated income before income taxes is as follows:

 

      September 30,       September 30,  
    2011     2010  

Tax provision at U.S. statutory rate

   $ 1,898,084     $ 4,562,113  

State taxes, net of federal benefit

     1,289,667       1,310,630  

Other (benefit)

     51,848       (133,313 ) 
   

 

 

    

 

 

  
    $ 3,239,599     $ 5,739,430  
   

 

 

    

 

 

  

At December 31, 2011 and 2010, the Company’s deferred tax assets (liabilities) consist of the following:

 

      September 30,       September 30,  
    2011     2010  

Deferred tax assets:

                

Deferred compensation

   $ 1,162,111     $ —    

Depreciation of fixed assets

     886,171       —    

Amortization of goodwill

     387,867       —    

Acquisition fees

     283,218       —    

Notes receivable

     257,504       —    

Interest in partnerships

     202,752       —    

Prepaid expenses and accruals

     —         101,417  

Other

     28,526       —    
   

 

 

    

 

 

  
      3,208,149       101,417  
   

 

 

    

 

 

  

Deferred tax liabilities:

                

Amortization of gaming rights and unrealized gain on tribal receivables

     (936,204 )      (1,001,954 ) 

Prepaid expenses and accruals

     (666,534 )      —    

Federal liability due to expected prepayment from amended Michigan modified business tax returns

     (152,475 )      —    

Allowance for doubtful accounts

     (56,739 )      —    

Interest in partnerships

     —         (70,023 ) 

Amortization of goodwill

     —         (929,003 ) 

Other

     —         (109,353 ) 
   

 

 

    

 

 

  
      (1,811,952 )      (2,110,333 ) 
   

 

 

    

 

 

  
    $ 1,396,197     $ (2,008,916 ) 
   

 

 

    

 

 

  

Management has made an annual analysis of its state and federal tax returns that remain subject to examination by major authorities (presently consisting of tax years 2006 through 2010) and concluded that the Company has no recordable liability as of December 31, 2011 or 2010, for unrecognized tax benefits as a result of uncertain tax positions taken.

In November 2010, the Company was notified by the Department of Treasury’s Internal Revenue Service (IRS) of their initial conclusion regarding their audit of GEM for the 2009 tax year. Effective January 10, 2012 the IRS audit of GEM was completed and GEM received a ‘No Adjustments Letter’ from the IRS, which stated there are no proposed adjustments to the 2009 returns. As part of the audit, the Company has amended their 2010 Federal tax return to reflect an amount due related to cumulative accrued interest income. The tax liability was $0.5 million, 50% of which is a contingency of RAM. The Company made a payment of $0.2 million to the IRS which has reduced the Company’s deferred tax liability and had no impact on net income.