Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
INCOME TAXES
10. INCOME TAXES
 
The income tax provision consists of the following (in thousands):
 
     
2012
    
2011
  
Current:
Federal
   $ 15,390     $ 4,398  
 
State
     1,509       2,247  
        16,899       6,645  
Deferred:
Federal
     (1,712 )     (3,131 )
 
State
     (12 )     (274 )
        (1,724 )     (3,405 )
      $ 15,175     $ 3,240  
 
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 35% to consolidated income before income taxes is as follows (in thousands):
 
   
2012
    
2011
  
Tax provision at U.S. statutory rate
   $ 15,053     $ 1,898  
State taxes, net of federal benefit
     1,067       1,290  
Other (benefit)
     (945 )     52  
    $ 15,175     $ 3,240  
 
At December 31, 2012 and 2011, our deferred tax assets (liabilities) consist of the following (in thousands):
 
   
2012
    
2011
  
Deferred tax assets:
            
Deferred compensation
   $ 1,713     $ 1,162  
Depreciation of fixed assets
     595       886  
Intangible assets and amortization
     591       388  
Acquisition fees
     --       283  
Notes receivable
     --       258  
Interest in partnerships
     --       203  
Accrued expenses
     933       --  
Chip and token liability
     93       --  
Allowance for doubtful accounts
     150       --  
Other
     531       28  
      4,606       3,208  
Deferred tax liabilities:
                
Amortization of gaming rights and unrealized gain on tribal receivables
     --       (936 )
Prepaid expenses
     (1,310 )     (667 )
Interest in partnerships
     (176 )     --  
Federal liability due to expected prepayment from amended Michigan modified business tax returns
     --       (152 )
Allowance for doubtful accounts
     --       (56 )
      (1,486 )     (1,811 )
    $ 3,120     $ 1,397  
 
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 2009 through 2011) and concluded that we have no recordable liability as of December 31, 2012 or 2011, for unrecognized tax benefits as a result of uncertain tax positions taken.
 
In November 2010, we were 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 IRS audit, we amended our 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 was a liability of RAM.  We made a payment of $0.2 million to the IRS which reduced our deferred tax liability and had no impact on net income.